DEPOSITORY PARTICIPANT (D.P.)
A depository can be compared to a bank. A depository holds securities (like shares, debentures, bonds, Government Securities, units etc.) of investors in electronic form. Besides holding securities, a depository also provides services related to transctions in securities.
A depository interfaces with the investors through its agents called Depository Participant (DPs). If an investor wants to avail the services offered by the depository, the investor has to open an account with a DP. This is similar to opening an account with any branch of a bank in order to utilise the bank’s services.
Tasks performed by depositories:
- Dematerialisation i.e., converting physical certificates to electronic from;
- Rematerialisation i.e., converting of securities in demat form into physical certificates;
- Facilitating repurchase / redemption of units of mutual funs;
- Electronic settlement of trades in stock exchanges connected to depository;
- Pledging/hypothecation of dematerialised securities against loan;
- Electronic credit of securities allotted in public issues, rights issue;
- Receipt of non-cash corporate benefits such as bonus, in electronic from;
- Freezing of demat accounts, so that the debits from the account are not permitted;
- Nomination facility for demat accounts;
- Servieces related to change of address;
- Effecting transmission of securities;
- Instructions to your DP over Internet through SPEED-e facility. (Please check with your DP for availing the facility);
- Account monitoring facility over Internet for clearing members through SPEED facility;
- Other facilities viz, holding debt instruments in the same account, availing stock lending/borrowing facility, etc.
WORKING OF DEPOSITORY PARTICIPANT
- RECEIVING AND LOCKING OF SLIP
To transfer the shares, the investor whether sale or purchase of shares, he has to fill the “Delivery Instrutions Slip”, or “receipt slip”. The slip contaions the data like number of shares to trade in price of shares, client code, execution date, and etc. It ‘s the obligation of the client to provide the slip to the depository partici- pant. If the client fails to provide the slip to the D.P. then the client will face the losses whatever. Then it ‘s the obligation of the D.P. to send the slip to N.S.C.C.L. within next 12 hours, if the D.P. fails to do that then the loss will be faced by the D.P.
Locking of the slip is to enter the slip code in the depositories participants computer system and locking the slip code. It means that the specific slip has been used for the transaction purpose and no further transaction can be done under the same slip code.
Punching of the slip includes the checking of the details mentioned in the “Delivery Instruction Slip”. It the duty of the depository participant that all the details in the slip are filled properly and duly signed by the client. The person who punches the slip is called the operator.
Once the details are verified by the, all the details are entered in the depositories participants computer system. The person who releases the slip is called the “Manager” Its the final stage to check and make any correction in the details before after this all the data is to be transferred to the main server and released to be send to the depository.