Dematerialisation and Depository Services Following the examples of developed capital markets, scrip-less trading and electronic settlements were introduced in India in 1996 with passage of Depository Act 1996. The system of paper less trading and settlements through electronic book entries with the help of depositories is referred to as dematerialisation. The Dematerialisation process works within the ambit of rules framed under SEBI Regulations 1996, bye laws and rules framed by NSDL/CDSL and Depository Act. The Indian Act provides for multiple depositories and at present there are two depositories viz. o National Securities Depository Ltd. (NSDL) with 3.81 mn accounts & o Central Depository Services of India Ltd. (CDSL) with 0.21 mn accounts NSDL was sponsored by IDBI, UTI & NSE and started functioning w.e.f. November 8, 1996. CDSL has been sponsored by BSE and has not been able to compete with NSDL trading in demat securities started on December 26, 1996 at NSE, Mumbai. Dematerialisation Only the securities admitted by NSDL can be dematerialised by the registered owner of the securities. Account in which the securities are being deposited should be in the same fashion as the securities. The holder should deface the share certificate(s) by writing on it ‘Surrendered for Dematerialisation’ and DP should make two holes on the share certificates so that these shares may not be traded in the market. The shares are submitted by the client alongwith De-mat request form to the DP and after processing in the computer, the share certificates are sent to Registrar and Transferring Agents for dematerialising the shares. After dematerialisation of shares, an electronic entry is created in the depository system. The shares demated are reflected in the account of the client and client can take a statement of holding which shows the shares are lying in the account. Trading in De-mat Securities Trading in De-mat shares can be done in two ways, which are as follows :– (a) Market Trades : When the shares are sold through Stock Exchange, it is called market trade. (b) Off-market Trade : When the shares are sold without the involvement of the Stock Exchange, it is called Off-market trade. The delivery of the shares sold in Off-market can be made through Stock Exchange and it will be treated as Market Trade.
doc_505789976.doc
doc_505789976.doc