DEMAT

It is the place where the shares of listed companies are bought and sold. In India, you have BSE and NSE as two big stock exchanges.
Place where business of buying and selling stock takes place. The stock market is not a specific place, though some people use the term Dalaal Street

The Bombay Stock Exchange (BSE)

It is the oldest stock exchange in Asia and largest no of listed stocks. its is located at dalai street, Mumbai(9:00 to 3 : 3 0) SENSEX .

National Stock Exchange of India Ltd (NSE)

Its is the largest stock exchange in India in terms of daily turnover and number of trades for both Equity and derivatives trading NSE (9: to 3:30) NIFTY .

MCX (MULTI Commodity exchange of India ltd)

Silver, Gold, |Copper & Natural gas and Crude oil (10:00 to 11:30)MCX.

Shares are bought and sold by you and me only through approved brokers. A share is issued by a company or can be purchased from the stock market.

In financial markets a share is a unit of account for various financial instruments.

The term stocks in the plural is often used as a synonym for shares. The income received from shares is called a dividend and a person owning his shares is called a share holder.

Pre-open Trading Session Trading Session Position Transfer Session Closing Session Option Exercise Session

09:00 - 09:15 09:15 - 15:30 15:30 - 15:50 15:50 - 16:05 16:05

Conversion of physical securities into electronic form. The term "demat", in India, refers to a dematerialised account for individual Indian citizens to trade in listed stocks or debentures in electronic form rather than paper, as required for investors by the Securities and Exchange Board of India (SEBI). A demat account is opened by the investor while registering with an investment broker (or sub-broker). The demat account number is quoted for all transactions to enable electronic settlements of trades to take place.

Access to the demat account requires an internet password and a transaction password. Transfers or purchases of securities can then be initiated. Purchases and sales of securities on the demat account are automatically made once transactions are confirmed and completed.

Introduced in India through the enactment of the Depositories Act, 1996. It is not mandatory. One may keep its holding partly in physical form and partly in Demat form.

A select list of securities announced by SEBI can be delivered only in demat form in the stock exchanges connected to NSDL.

Participants Investors The Depository NSDL [national securities depository ltd.] CDSIL[central depository of securities India ltd.] The Depository Participants The Issuing Company

Individual Partnership Firm HUF Company

Beneficial Owner is a person in whose name a demat account is opened with Depository for the purpose of holding securities in the electronic form.

A depository is an organization, which holds the beneficial owner's securities in electronic form, through a registered Depository Participant (DP). A depository functions somewhat similar to a commercial bank. To avail of the services offered by a depository, the investor has to open an account with it through a registered DP.

Functions of Depository

A Depository Participant (DP) is an agent of the depository who is authorized to offer depository services to investors.

Financial institutions, banks, custodians and stockbrokers complying with the requirements prescribed by SEBI/ Depositories can be registered as DP.

Dematerialization Account Transfer Transfer and Registration Corporate Actions Pledge and Hypothecation Linkages with Clearing System

The extent of documentation required to open a Demat account may vary according to your relationship with the institution. In fact, banks usually offer additional incentives to customers who open a Demat account with them. Along with the application form, your photographs (with coapplicants) and proof of identity/residence/date of birth have to be submitted. The DP s also ask for a DP-client agreement to be executed on nonjudicial stamp paper.

A cancelled check, preferably MICR Proof of Identification Proof of Address Recent photographs, one and, or more. For proof of identification and, or address self-attested facsimile copies of PAN card, Voters ID, Passport, Ration card, Drivers license, Photo credit card, Employee ID card, Bank attestation, latest IT returns and, or latest Electricity/Landline phone bill are sufficient. While they only ask for photocopies of the documents, they will need the originals for verification.

Once the account is functional, the DP will allocate you a unique Beneficial Owner Identification (BO ID) to quote while making transactions. While selling shares, provide the DP with a delivery instruction, following which your Demat account will get debited and payment for the transaction will be made through broker/ sub broker / bank.

Similarly, while buying shares, you will need to place an order for the shares by quoting the BO ID. The shares will be credited into your Demat account by the DP. Payment towards the buying transaction will be taken from your bank account

Fill Demat request form (DRF) (obtained from a depository participant or DP with whom your depository account is opened). Deface the share certificate (s) you want to dematerialize by writing across Surrendered for dematerialization. Submit the DRF and Share Certificates to DP. DP would forward them to the issuer/their Registrar & Transfer Agent. Investors depository a/c dematerialized securities. would be credited with the

Dematerialization is normally completed within 15 days after the share certificates have reached the issuer/their R&T agent. Thus it will take only a month from the date one hands over shares, to receive Demat Credit.

The DP will provide you with periodic statements of your stock holdings and transactions.
The charges for opening and maintaining the Demat account differs with DPs. A fair idea of comparative rates can be obtained from the NSDL and CDSL websites.

If you are a buyer

Purchase securities in any of the S.E.s(connected to NSDL)

through a broker of your choice and make payment to your broker . Broker arranges payment to clearing corpo./clearing house of the stock exchange. Broker receives cr. in his clearing a/c. Broker can directly transfer these securities to your a/c. Broker gives instructions to your DP to debit his clearing a/c and credit your depository a/c. You give instructions to your DP for receiving Cr. If instructions match your a/c with your DP is credited.

If you are a seller

Sell your demat securities in any of the Stock Exchanges linked to

NSDL /CDSL through a broker.

You give instructions to your DP for Debit of your Depository a/c and

Credit of your brokers clearing member a/c .

On pay in day your broker gives instruction to his DP for delivery to

clearing corporation.
Broker receives payment from the clearing corporation.

Charges are paid through DPs

Custody charges. Annual maintenance charges. Transaction charges. Dematerialisation charges. Rematerialisation charges.

Elimination of bad deliveries

Elimination of all risks associated with physical certificates No stamp duty Immediate transfer and registration of securities Reduction in brokerage

Reduction in rate of interest on loans

Reduction in handling of huge volumes of paper

Faster settlement cycle

Buyer is secured

Faster disbursement of non-cash corporate benefits

Practical Example

THANK YOU