CHAPTER-1

OBJECTIVES
1.1 Objectives The objectives of my research project have been1. To know the types of Depositories in India. 2. To know the roles of depositories in E-Trading. 3. To know the benefits of depositories. 4. To know the advantages of online trading. 5. To know the online services provided by NSDL to their BO's. 5. To know the online services provided by CDSL to their BO's.

1

CHAPTER-2

RESEARCH METHODOLOGY
2.1 Meaning of Research Research in simple terms, refers to a search for knowledge. It is also known as a scientific and systematic search for information on particular topic or issue. According to Redman and Mory (1923), defined research is a "systematized effort to gain new knowledge". 2.2 Research Methodology It is the way of systematically solving the research problem. It is a science of studying how research is conducted scientifically. 2.3 DATA COLLECTION Data has been collected from secondary source. Sources of Secondary data are: 1. Internet 2. Magazines 3. Newspapers

2

CHAPTER-3

LIMITATIONS OF THE STUDY
3.1 Limitations • • • The time was also a limitation. Finance was also a limitation. The employees of the company were not supportive. They have not provided me much information related to my project report.

3

CHAPTER-4

REVIEW OF LITERATURE
4.1 Literatures Krishnamurthy in 2005 after inception of online trading in India in the year 2000 online trading is gained momentum with trading volumes growing by 150 per cent per annum in the years 2003-2005.The volume of all trades executed through the Internet on the National Stock Exchange had grown from less than Rs 100 crore (Rs 1 billion) in June 2003 to over Rs 700 crore (Rs 7 billion) in July 2005 which was a handsome growth. Anup Bagchi the MD and CEO of ICICIdirect.com as their company was the first player to enter the online trading segment, ICICIdirect has made broking more structured and transparent which further reduced the operational hassles. At the same time, the number of subscribers trading through the portal of Kotak Securities had gone up significantly by 150 per cent and the number of online trading customers had grown from 30,000 to 75,000. Moreover, the company expected to have at least 130,000 customers by the end of fiscal. Online trading represented 30 per cent of Share khan's broking business in the year 2005. The number of customers registered with Sharekhan was 130,000 at that point of time of which 60,000 used Internet trading. Mr. R. Kalyanaraman the senior vice-president of Sharekhan Ltd Sharekhan gets 60% of its brokerage revenue from the online trading. In 2003 when there were only 10-15 brokers empanelled for Internet trading with the exchange and accounted just about 10% of total volume in Indian stock markets the number has increased to around 300 brokers wooing Internet- savvy investors. According to a recent study Ernst and Young only 4% of India’s domestic household savings or just about 13% of its gross domestic product is being channeled to shares and debentures issued by companies which is very less or in an initial stage.

4

Sudip Bandyopadhyay chief executive of Reliance Money Ltd says that online investing is still at a nascent stage in India and expects that Internet-based trading will eventually take about half of the total stock market trading as like with developed markets such as the US. Philippines has the highest online trade with about 55-60% execution of trade is online. The reason is that they had wider Internet connectivity years before India. The biggest challenge in India remains better Internet connectivity. The earlier Web-based technology used for Internet trading has been replaced by specialized software which gives real-time global data streaming rates to trader helping investors to analyze the market trends and helps in faster execution of trades. Earlier the investors made trade calls over the phone, which sometimes led to the delays. Aseem Dhru, MD and CEO, HDFC Securities in today’s scenario an online business can break even in as short a period as about 18-24 months. Earlier there were other problems like the Internet connectivity was unreliable, and investors resisted the strict margins and compliance online stock broking demanded. Initially it seemed that online stock trading would flop. Tarun Shah CEO OF Sharekhan the growth of Internet trading in the stock markets would come with a rapid pace and web trading in the total turnover of the capital markets would go up to 10 to 15 per cent in the next 2-3 years, which is now just about 1 to 2 per cent.

5

Company offers wide range of services including equities. personal finance services. commodities. Religare retail network has more than 900 locations in 300 cities and towns in India. Mutual fund. Wealth management and the Institutional spectrum. 6 . invest in Mutual Funds. Investment banking and institutional broking services. Investment banking and institutional broking services. Vision of Religare The vision is to build Religare as a globally trusted brand in the financial services domain and present it as the “investment gateway of India ”. Religare Securities Limited (RSL) is a subsidiary company of Religare Enterprises Ltd and involve in equity related services include online trading at BSE and NSE. IPO. and buy Insurance. wealth advisory. Commodities.CHAPTER-5 COMPANY PROFILE 5. Derivatives.000 in number ceaselessly strive to provide financial care driven by the care value of diligence and transparency. All employees of the organization currently more than 10. People who wonder where Religare word came from. insurance broking. Religare provide its service in three different segments including Retail. commodities. portfolio management services. it is a Latin word meaning 'to bind together'.1 Company Profile Religare Enterprises Limited is Ranbaxy Laboratories Limited promoted financial product and service Provider Company. Religare provides the online gateway to their investors so investor can trade online in Equities. apply for IPO's.

VARIOUS COMPANIES UNDER THE FLAGSHIP OF RELIGARE Insurance Distribution Religare insurance broking limited. Grounded in the Religare philosophy. a 100% subsidiary of Religare enterprise is one of the India’s leading insurance broking firm. Bombay stock exchange. with one of the retail networks in the country. highly skilled and dedicated professionals strive to offer the client investment solutions across the country. Intra day trading calls 7 . Here company provides personal attention to the clients and which is backed by the strong analysis of the securities and recommendations and providing 1. NCDEX & NMCE. an effort of the Religare group was initiated to spearhead Exchange based commodity trading. RCL is a trade facilitator providing the platform to trade and to cater TO THE NEED TO THE Unique need of the exchange based commodity trading. non life Insurance and re insurance domains. Brand Essence Core brand essence is diligence and Religare is driven by the ethical and dynamic processes of wealth creation. As a member of MCX. The company holds a composite broker’s license operating in life insurance. Daily reports 2. Commodity trading Religare commodities limited. a vibrant and growing subsidiary of Religare is a member of national stock exchange.Mission Providing financial care driven by the core values of diligence and transparency. and depositary participant with both NSDL & CDSL. The company besides catering to the needs of the urban commodities markets is also creating trading centers at local mandis Equity Sector Religare securities limited.

tax benefits. Vehicle loan 8 . Following are the classes for which the loans are available.3. Certified financial planners hired by Religare use their skills and knowledge base for the active suggestions to the clients for the investments. 1. insurance and recommend stocks to buy or sell depending upon the short term and long-term financial goals of the client. Personal loan 2. Education loan 3. Health benefit loan 4. Personal loans Religare provides the loans to the clients depending up on the needs of the clients. Intra day derivatives calls Personal Loan Services It is to cater the financial needs of the individuals by advising them on various financial Plans.

Sunil Godhwani Mr.Padam Bahl Ms.Shachindra Nath Mr.J W Balani Mr.No 1 2 3 4 5 6 7 8 9 10 11 Name Mr.5.G P S Bhalla Mr.Deepak Ramchand Sabnani Designation Alternate Director Alternate Director Chairman and Managing director Director & CEO Director & CFO Independent Director Independent Director Independent Director Independent Director Independent Director Independent Director 12 Mr.R K Shetty Capt.Harpal Singh Non Executive Director CHAPTER -6 INTRODUCTION 9 .)Sunita Naidoo Mr.Stuart D Pearce Mr.2 BOARD OF DIRECTORS .Anil Saxena Dr.(Mrs.Kathryn Matthews Mr.

and (c) providing for maintenance of ownership records in a book entry form. the process of transfer would take much longer than the two months stipulated in the Companies Act. The second aspect of the settlement relates to transfer of shares in favour of the purchaser by the company. The system of transfer of ownership was grossly inefficient as every transfer involves physical movement of paper securities to the issuer for registration. 1996 was passed. restricting the company's right to use discretion in effecting the transfer of securities. Theft.1 Introduction The erstwhile settlement system on Indian stock exchanges was also inefficient and increased risk. 10 . To obviate these problems. the issuer has the right to refuse the transfer of a security. and the transfer deed and other procedural requirements under the Companies Act have been dispensed with. trades or transactions have to be settled by either squaring up the carrying forward positions or settling by payment of net cash or net delivery of securities. restricted liquidity and made investor grievance redressal time consuming and. It provides for the establishment of depositories in securities with the objective of ensuring free transferability of securities with speed. forgery. There had to be a physical delivery of securities -a process fraught with delays and resultant risks. In any stock exchange. at times. viz. In many cases. The transfer was by physical movement of papers. mutilation of certificates and other irregularities were rampant.. In addition. have come up to provide instantaneous electronic transfer of securities. The Act has made the securities of all public limited companies freely transferable. accuracy and security. intractable. In order to streamline both the stages of settlement process. and a significant proportion of transactions would end up as bad delivery due to faulty compliance of paper work. the Act envisages transfer ownership of securities electronically by book entry without making the securities move from person to person. subject to certain exceptions.6. the Depositories Act. due to the time that elapsed before trades were settled. NSDL and CDSL. with the change of ownership being evidenced by an endorsement on the security certificate. (b) dematerialising the securities in the depository mode. All this added to costs and delays in settlement. It does so by (a) making securities of public limited companies freely transferable. Two depositories.

transparency etc. This legislation envisaged multiple depositories in India to ensure benefits of competition for the users of the depository system. accuracy. free from the problems like bad deliveries. Perhaps. no other single act other than the Depositories Act has had such profound all round impact on every single stakeholder in the Indian capital markets. and paved a way for an orderly conduct of the financial markets through free transferability of securities with speed. odd-lots etc. The Depositories Act which facilitated establishment of depositories (like CDSL) in India sought to effectively curb irregularities in the capital market. reduced risks and increased transparency of transactions in the securities market. The investor is able to save a lot on account of stamp duty as government has exempted stamp duty on transfer of securities at present. which hurts the small investors. if it is long leads to several price distortions and allows for market manipulation.This account settlement period.2 THE DEPOSITORIES ACT The Depositories Act. 1956 and which has been granted a certificate of registration under 11 .it has been possible to reduce this settlement period. 6. Investors are also spared from the problems of preserving the securities held in physical form. and protect the interests of the investors. It also immensely benefited the issuer companies. It increases the chances of speculation resulting in volatility. the investors are able to enjoy many benefits like free and instant transferability in a secured manner at lower costs. in terms of reduced costs and the effort expended in managing their shareholder populace. improved investor protection.3 DEPOSITORY The Depositories Act defines a depository as “a company formed and registered under the Companies Act. With the application of IT in the securities market screen-based trading and trading through the Internet . 1996. 6. Due to the introduction of the depository system. ushered in an era of efficient capital market infrastructure. Today the tradable lot is reduced to “one unit” hence even a common man is able to invest money in one equity share or bond or debenture.

SIMILARITIES 12 . share transfer agents etc. selling. 6. there are two depositories namely. mutual fund units etc in the dematerialized form and transactions could be effected on it. depositories have made the going easier to other institutions as well such as Stock Exchanges and its clearing houses. bonds.” The main function of a depository is to dematerialize securities and enable their transactions in book-entry form.4. Physical securities may be immobilized by the depository or securities may be dematerialized (so that they exist only as electronic records)”. Mumbai. depositories are offering various transactional services to its clients to effect buying. and the Central Depository promoted by the Stock Exchange.1.4 Similarities and differences between a bank and a depository 6. Through a system of paperless securities.sub-section (1A) of section 12 of Securities and Exchange Board of India Act. stock broking firms. transfer of shares etc. • Besides providing custodial facilities and dematerialization. equity issuing companies. In simple terms depository is an organization where securities of an investor are held in electronic form. As per The Bank for International Settlements (BIS). A depository can be defined as an institution where the investors can keep their financial assets such as equities. depository is “a facility for holding securities which enables securities transactions to be processed by book entry. the Unit Trust of India and the National Stock Exchange. 1992. In India. the • National Securities Depository Limited(NSDL) promoted primarily by IDBI.

dematerialization. transaction charges etc. An account holder is entitled to get a statement of demat account periodically from the DP. Nomination facility is available in the bank account. Renders services like safe keeping of the money (funds) of customers in book entry form. 13 .) lying in a demat account are fungible A depository needs express written consent (Debit Instruction Slip) of the account holder for debiting his account. inseparable and without any identification number). A demat account can be operated by power of attorney holder. exactly similar. The bank is entitled to charge some fees for the services like account maintenance. Is required to verify the identity and address of the investor before opening a demat account. A bank needs express written consent of the customer (like a cheque) for debiting his account. Is required to verify the identity and address of the customer before opening a bank account. Renders services like safe keeping of securities (shares. debentures etc. Nomination facility is available in case of demat accounts also. remittances.e. Facilitates transfer of ownership of securities within the depository (transfer) and also between two depositories. Power of attorney holder can operate a bank account. pledging.A Bank Promoted by persons and institutions of repute and good standing. bonds. Government etc. A Depository (like CDSL) Promoted by persons and institutions of repute and good standing. However.) of the customers in book entry form. Securities held in physical form are specific and have distinctive identification features and numbers. A bank customer is entitled to get a statement of account from the branch periodically. safe custody etc. generally. Facilitates transfer of funds within the bank (transfer) and also between two banking institutions (through clearing). bonds. Currency notes held in physical form are specific and have distinctive identification features and numbers. Indian Rupees or U S Dollars) lying in a bank account are fungible (i. the funds (say. The depository is entitled to charge some fees for the services like account maintenance. the securities (Equity Shares. Has an administrative Central Office and renders services through Depository Participants (DPs) and their branches. However. Has an administrative Central Office and renders services (like account opening). debentures. through branches.

A Depository (like CDSL) A demat account can be opened by an investor even without having/ owning any securities i. 14 .4.2 DIFFERENCES A Bank For opening a bank account. such as a savings bank account.6. with zero balance.e. a minimum balance has to be deposited along with the account opening form.

A demat account can be opened. JOINTLY.A customer having an account with a bank is called as an Account Holder. 15 . operated upon only by ALL the account holders account holders or by “any one/two/three of". addition or deletion of name(s) of one or more of the account holders (beneficial owners) is NOT permitted. or. Banks. financial institutions and stock brokers are acting as Depository Participants after obtaining the required approval from SEBI and also complying with other statutory requirements. A depository is not entitled to use the securities lying in the demat accounts of the customers and hence does not pay any interest to them. at present. one has to open a Depository Account with the DP and shares for Dematerialisation have to be surrendered after it have been duly transferred to his name. addition or deletion of name(s) of one or more of the account holders is permitted.5 DEPOSITORY PARTICIPANTS A Depository Participant is the registered agent of the depository concerned and it is through the DP that an investor gets the services of a depository. In the demat account. by “either or survivor” of the the joint account holders. An account holder of the depository is called as Beneficial Owner (of the securities). 6. A bank is entitled to use funds lying in the savings or current deposit accounts of the customers in the normal course of business and pays interest to them for the use. To avail this service. In the bank account. A bank account can be operated upon “jointly”.

Many of the developed countries 16 .1 Multi-Depository System: The depository model adopted in India provides for a competitive multi depository System. Dematerialization as against immobilization: The model adopted in India provides only for dematerialization of securities. corporate and their Transfer agents etc as stated above. This interface of the depository with various associates opens up many services to the investor through the DP account such as payment or receipt of shares towards his transactions via Stock Exchanges. CHAPTER 7 DEPOSITORY SYSTEM 7. There can be various entities providing depository services. This is a significant step in the direction of achieving a completely paper-free securities market. receipt of bonus or right shares from the corporates in which he is a shareholder.1. Dematerialisation (and many more.The DP account links the investor to the Depository which in turn has electronic links with the Stock Exchanges.1 Key features of depository system in India 7. registering of share transfer.

the investors stand to gain by way of efficient settlements.have opted either for immobilization (E.1.g.1. all equity shares in the class of fully paid up shares are interchangeable. All the players have to be conversant with the rules and regulations as well as with the technology for processing. NSDL is the Registered Owner in the books of the issuer. All subsequent transactions in such immobilized securities take place through book entries. Immobilization of securities is done by storing or lodging the physical security certificates with an organization that acts as a custodian . Thus all securities in the same class are identical and interchangeable.2 Fungibility . But the implementation of the system has to be secure and well Governed.a securities depository. Japan) of securities.3 Registered Owner/ Beneficial Owner – In the depository system. the securities dematerialised are not identified by distinctive Numbers or certificate numbers as in the physical environment. The intermediaries in this system have to play strictly by the rules. etc. Dematerialisation of securities occurs when securities issued in physical form are destroyed and an equivalent number of securities are credited into the beneficiary owner's account. The actual owners have the right to withdraw the physical securities from the custodial agent whenever required by them. In a depository system. For example. a jumbo certificate is issued in the name of the beneficiary owners based on which the depository gives credit to the account of beneficiary owners. India has adopted dematerialisation route to depository. For the securities dematerialised. All the rights. but ownership rights and liabilities rest with Beneficial Owner.In the depository system. lower costs and lower risks of theft or forgery. In the case of IPO. 7.g. Hong Kong) or both immobilization and dematerialization (e. duties and liabilities underlying the security are on the beneficial owner of the security. the ownership of securities dematerialised is bifurcated between Registered Owner and Beneficial Owner. 17 . B 7.

he becomes the legal owner of the securities. • • • No stamp duty for transfer of any kind of securities in the depository. Such problems do not arise in the depository environment. Elimination of all risks associated with physical certificates Dealing in physical securities has associated security risks of theft of stocks. the investor has to send it to the company's registrar so that the change of ownership can be registered and this usually takes many months. once the securities are credited to the investors account on pay out.7. and loss of certificates during movements through and from the registrars etc. the ownership and transfer of securities takes place by means of electronic book entries. Having purchased securities in the physical environment. Thus. To overcome this problem. debt instruments and units of mutual funds etc in the depository. Immediate transfer and registration of securities In the depository environment. rights 18 .4 Free Transferability of shares: Transfer of shares held in dematerialised form takes place freely through electronic bookentry system. This waiver extends to equity shares. 7. There is no further need to send it to the company's registrar for registration.2 Benefits of Depository System • • • • In the depository system. mutilation of certificates. bonus. So long as the shares are with the company or its agent for transfer.1. investors used to keep shares without effecting ownership transfer but this is risky because they will not get their entitlements for dividend. the investor could not sell it in the market even the price is very attractive and this increases his opportunity cost. Bad deliveries could be eliminated since shares are registered in the electronic form that cannot be mutilated easily. cost can be reduced.

e. if any. • Faster disbursement of non-cash corporate benefits: NSDL provides for direct credit of non-cash corporate entitlements like rights. • Faster settlement cycle: The exclusive demat segments follow rolling settlement cycle of T+2 i. Bye-Laws approved by SEBI. Securities and Exchange Board of India (Depositories & Participants) Regulations. Transmission etc In case of change of address or transmission of demat shares. • Elimination of problems related to selling securities on behalf of a minor. investors are saved from undergoing the entire change procedure with each company or registrar. • Low brokerage for trading in dematerialised securities Brokers provide this benefit to investors as dealing in dematerialised securities reduces their back office cost of handling paper and also • • Eliminates the risk of being the introducing broker: Elimination of problems related to address Change. 1996. A natural guardian is not required to take court approval for selling demats securities on behalf of a minor.etc. where the investor is a registered holder of securities.3 Legal Framework The operations of the depositories are primarily governed by the Depositories Act. thereby ensuring faster disbursement and avoiding risk of loss of certificates in transit. and Business Rules framed in accordance with the Regulations and Bye-Laws The Depositories Act passed by Parliament received the 19 . the settlement of trades will be on the 5th working day from the trade day. and the share in question will become bad delivery if one book closure is missed. 1996. Investors have to only inform their DP with all relevant documents and the required changes are effected in the database of all the companies. This will enable faster turnover of stock and more liquidity with the investor. bonus etc to an investor's account. 7.

the issuer intimates the depository the details of allotment of security. • Section 8: Option to hold securities in demat form: In the depository system. the depository enters the name of the allottee as the beneficial owner of that security in its record. The DP will then make the depository services available to the investor. Any investor who would like to avail the services of a depository has to enter into an agreement with any DP of his choice. If an investor opts for receiving the securities in dematerialised form. depositories should obtain a certificate of registration and a certificate of commencement of business from SEBI. 20 . This was to see that there is competition in the service and there is more than one depository in operation. It was notified in a Gazette on August 12 of the same year. At present. • Section 7: Free Transferability: The securities held by an investor in the depository are freely transferable from one beneficial owner to another. 1956 and sponsored by the specified category of institutions can set up a depository in India. The DP has to enter into an agreement with the depository to this effect. Before commencing operations. every investor subscribing to securities offered by an issuer has an option to receive the same in physical form or dematerialised form. On receipt of this information. • • Section 9: Securities held in a depository are fungible: Section 10: Registered Owner and Beneficial Owner: All securities held by the depository are in dematerialised and fungible form. two depositories are registered with SEBI – The National Securities Depository Limited (NSDL) Central Depository Services (India) Limited (CDSL). As per the Act: • Section 4: DP is an agent of the Depository: A DP is an agent of the depository.President's assent on August10. Only a company registered under the Companies Act.1996. The Act enables the setting up of multiple depositories in the country. who provides various services of the depository to investors.

• Section 16: Depository to indemnify losses: A depository shall indemnify a beneficial owner. notice. Details of participants. transferee. issuers. Details of securities declared to be eligible for dematerialisation in the depository. But as a registered owner. issuers' agents and beneficial owners.4 Records to be maintained by Depository Every depository is required to maintain the following records and documents. Such other records as may be specified by SEBI for carrying on the activities as a depository. Details of the holdings of the securities of beneficial owners as at the end of each day. 21 . participants. it does not have any voting rights or any other rights in respect of those securities. • • • • • • • • • Records of securities dematerialised and rematerialised.The depository is deemed the registered owner for effecting transfer of ownership of security on behalf of a beneficial owner. These have to be preserved for a minimum period of five years. • Section 14: Option to opt out of depository: A beneficial owner may opt out of a depository in Respect of any security by requisite intimation to the depository. and the dates of transfer of securities. entry and cancellation of pledge or hypothecation. 7. Records of approval. Records of instructions received from. A register and an index of beneficial owners. and sent to. The names of the transferor. The beneficial owner is entitled to all rights and benefits as well as subject to all liabilities in respect of his securities held in the depository. any loss caused due to negligence of the depository or its participant.

Generally. A depository can provide depository services only through a DP. certificates of deposit. government securities. 7. A depository cannot directly open accounts and provide services to clients. Any person willing to avail the services of the depository can do so by entering into an agreement with the depository through any of its participants. rights under collective investment schemes and venture capital Funds. bonds. securitized debt.5 Services of Depository A depository established under the Depositories Act can provide any service connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository.6.6. Every depository in its Bye-Laws must state which securities are eligible for demat holding. scrips. Dematerialisation is the process of converting securities held in physical form into holdings in book entry form. debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate (b) Units of mutual funds. and unlisted security 7. the following securities are eligible for dematerialisation: (a) Shares.7. money market Instruments.1 Dematerialisation: One of the primary functions of depository is to eliminate or minimize the Movement of physical securities in the market. This is achieved through dematerialisation of securities.6 Functions of depositories: 7. debentures. stocks.2 Account Transfer The depository gives effects to all transfers resulting from the settlement of Trades and other transactions between various beneficial owners by recording entries in the accounts of such beneficial BOs 22 . commercial paper.

transfer of security occurs merely by passing book entries in the records of the depositories.5 Pledge and Hypothecation: The securities held with NSDL may be used as collateral to secure Loans and other credits by the clients. 7.6.6. depository itself takes the responsibility of distribution of corporate benefits.4 Corporate Actions: A depository may handle corporate actions in two ways. it merely provides information to the issuer about the persons entitled to receive corporate benefits. The securities pledged/hypothecated are transferred to a segregated or collateral account through book entries in the records of the depository.6.6 Linkages with Clearing System: Whether it is a separate clearing corporation attached to a stock exchange or a clearinghouse (department) of a stock exchange. In the other case. 7. these steps have to be repeated. borrowers are required to deliver pledged securities in physical form to the lender or its custodian. Under a depository system. on the instructions of the beneficial owners. execution of a transfer instrument and payment of stamp duty.6.7. If the borrower wants to substitute the pledged securities. In a manual environment. Use of depository services for pledging/ hypothecating the securities makes the process very simple and cost effective. This has a time and money cost by way of transfer fees or stamp duty. In the first case. For affecting a transfer. the clearing system performs the functions of ascertaining the pay-in (sell) or pay-out (buy) of brokers who have traded 23 .3 Transfer and Registration: A transfer is the legal change of ownership of a security in the records of the issuer. 7. certain legal steps have to be taken like Endorsement. These securities are verified for authenticity and often need to be transferred in the name of lender. The depository accelerates the transfer process by registering the ownership of shares in the name of the depository.

let us now look at the organization and functions of National Securities Depository Limited(NSDL). 24 . Actual delivery of securities to the clearing system from the selling brokers and delivery of securities from the clearing system to the buying broker is done by the depository. Having understood the depository system.on the stock exchange. depositories and the clearing system should be electronically linked. To achieve this.

Bank-backed firms 2. Though the bank based has performed better but the latter have not lagged too far behind. higher margin finance amounts and lower brokerage rates. motilaloswal.com and sharekhan. The hardware used comprises Web and application servers. Demat accounts and brokerage accounts into a single interface. They can also check the status of their orders either through e-mail or through the interface that it cannot be accessed by a third party.com. As the servers of the online trading portal are connected all the time to the stock exchanges and designated banks. An investor has to register with an online trading portal like ICICIdirect. The integrated 3-in-1 accounts offered by these bank-backed brokerages help their parent bank by giving it accounts along with float income. Bank-backed brokerages such as ICICI direct and HDFC Securities have expanded on the basis of their brand name and the trust of investors in them. switches. firewalls and security devices. 25 .com and many companies like that and investor gets into an agreement with the firm to trade in different securities according to the terms and conditions given on the agreement. the order processing is done in real time and investors can have updates on the trading. Religare and Indiainfoline have expanded by offering customers a mix of online and offline accounts. and specialized appliances. Entrepreneur-backed companies like Sharekhan. There are two broad models in play in the online brokerage space1.CHAPTER 8 ONLINE TRADING 8. Indiabulls. A single window is also there for all exchanges and a single screen is there for the complete order routing mechanism.1 What is online trading? Online trading involves investment activity that takes place over the Internet and it does not require physical inclusion of the broker. Entrepreneur-floated firms. Some options are usually given to users such as to link their bank account. routers.

• An investor can review the price history of any stock in chart format online. The offline model has a downfall in the form of lower bandwidth.The reason why online trading has developed over conventional offline brokerage firms is that this conventional method struggled with unfavorable economies.000 trades a day on the National Stock Exchange alone accounting for 3-4% of NSE trades of 5 million a day. Today 30% of volumes on the NSE come from this and it may go up to 50% in three-four years providing explosive growth for online broking in India. 26 . and the cost of bandwidth has fallen to one-eighth of what it was in 2000 giving online broking an advantage especially in the case of lower-volume retail investors. As the markets opens for 330 minutes a day one dealer can at best execute 500 trades in a day while online company like ICICI direct executes 150. IT costs. To be a successful trading portal it will definitely depend on bouquet of services provided by it for an end-user.2.000200. Besides the salary costs it would also demand huge expenses in real estate and support systems. 8. An investor can-Know the price of any stock he desires at any point time on the internet.2 Advantages of online trading 8. Most of the portals charge a small registration fee and brokerage based on various conditions but it is important for the organization to keep focused on customer-centric services and delivery models to actually enjoy the most attention.1 Provides with the Freedom of Information • The Internet provides a new sense of controlling our financial future as the amount of investment information available online is truly outstanding. It would require a large amount of dealers to service this demand. Staff cost is just one example of it.

3 Provides access to the market through the sophisticated information streams.4 Ensures the best price for investors Some companies like Investsmart (IL&FS) specialize in the techniques.2. 27 . 8.2. 8.2. He may also consult with other investors online present around the world Some online stock broking companies provide real-time stock quotes.• • • Helps an investor in receiving a wealth of free commentary and analysis about stock markets in the global economy. trading account and demats accounts.2. 8. The process involves a complete integrated electronic chain starting from order placement.5 Online trading offers greater transparency Online trading offers the investors with greater transparency by providing with an audit trail. which offers the best price deals for the buy and sell orders of the investors and traders providing the high level of transparency by displaying of information relating to the specific stocks and company profiles.2 Provides Control to Investors Money When an investor wants to buy or sell stock he no longer need to call his broker on the phone thus helping in the execution of the order instantly on the internet. dedicated trading platforms and sophisticated tools the investor can access the markets. which leads to easy and paperless trading for the client. daily roundups of the stock market. and a deep community of fellow investors. to clearing and settlement and finally ending with a credit into the depository account of the investor.6 Provides hassle free trading Online trading provides an integration of the bank account. Helps an investor to conduct an extensive financial research of any company he desires. 8. which provide more agility in buying and selling stocks. 8. which helps in getting the best quote for the orders. All these stages are inspected which brings the transparency into the system.2. expert commentary.

which provide streaming news to give investor the latest financial information as it occurs.2.8.2. 8. which was earlier available only to the big traders. It has provided with a level playing field for all investors in the securities market.11 Online help desk Some companies provide online help desk an investor cancan contact the Tele Trading Executives from the Tele Trading team during and after market hours and can clarify questions. 8.2. 8. 8.2.13 Keeps Information Secure As per the guideline provided by SEBI every effort has to be made to keep the investors account and personal information secure by use of encryption technology and updated security technology to advanced fraud prevention measures.9 Online trading reduces the settlement risk This method of trading reduces the settlement risk for the investor as when a short sell order is played the orders are squared off at the specified cut-off time and are not allowed to be carried forward. 8. 8.7 Online trading allows instant trade execution Online transactions helps in the quick execution of the entire trading transaction right from logging to the traders site and to the settlement of the bank account in a very short period of time.8 It provides a level playing field Trading online gives even the smallest retail investor access to information.12 Instant order trade confirmations Through online trading every trade is confirmed immediately and investor receives an onscreen confirmation following every trade with full details for the investors records which avoids costly errors that would have been discovered when it is too late. 28 .2.2.10 Provides live financial news & analysis The online sites also provide live terminals.2.

e. investor can’t get customized expert advice. whereas in offline the broker gives suggestions according to investors strategy (i. 3. short term or long-term) 2. Privacy is less due to hacking scandals 4 .Transactional errors due to technical problems 29 .8. In online terminal.3 Disadvantages of online trading 1. Brokerage is high compared to offline.

Union Bank of India 9.the largest development bank in India.CHAPTER 9 NATIONAL SECURITIES DEPOSITORY LIMITED 9. 1996. Canara Bank 13. 7.1 Introduction to NSDL National Securities Depository Limited is the first depository to be set-up in India The Industrial Development Bank of India (IDBI) . the Board appoints an Executive Committee (EC) of not more than 15 members. NSDL commenced operations on November 8.2 Management of NSDL NSDL is a public limited company managed by a professional Board of Directors. HDFC Bank Limited 9. Citibank N. State Bank of India 5.the largest Indian mutual fund and the National Stock Exchange (NSE) . Unit Trust of India (UTI) . Standard Chartered Bank 8. To assist theMD and CEO in his functions. The day-today operations are conducted by the Managing Director and CEO. Deutsche Bank A. National Stock Exchange of India Limited 4. 2009: 1.G. Oriental Bank of Commerce 6.A. Unit Trust of India 3. sponsored the setting up of NSDL and subscribed to the initial capital. 30 . The Hong Kong and Shanghai Banking Corporation Limited 10. Industrial Development Bank of India 2. 11. The following organizations are shareholders of NSDL as on December 31. Dena Bank 12.the largest stock exchange in India.

P.Board of Directors Dr. R. Bangalore Mr. 2010 Director 31 . R. Mr. H. Senior Partner M/s Bansi S. India Deutsche Bank 9.) Former Judge Supreme Court of India Mr. Vora Former Chairman & Managing Director Industrial Development Bank of India Limited Mr. Lall Managing Director & CEO Infrastructure Development Finance Company Limited Dr. Ashok Mukand Former Deputy Managing Director & CFO State Bank of India 1 2 3 Chairman Managing Director & CEO Director 4 Director 5 Director 6 Director 7 Director 8 Director 9 Director 10 Director 11 Director Mr. Srikrishna (Retd. Kaushik Shaparia Managing Director 12 Global Transaction Banking Head. Gagan Rai National Securities Depository Limited Mr. Rajiv B.N. Mehta & Co. Justice B. Bansi S Mehta Chartered Accountant.3 NSDL Facts and Figures as on July 31. Sudesh Punhani Former Director (Finance) National Aviation Company of India Limited Mr.K. Prakash G Apte Former Director Indian Institute of Management. Bansal Executive Director IDBI Bank Limited Mr. Patil Chairman The Clearing Corporation of India Limited Mr. P. Ravi Narain Managing Director National Stock Exchange of India Limited Mr.

Bangalore.4 Vital Statistics NSDL Companies Linked 474 That are compulsory demat trading list (104 104 scripts) That are in Nifty (50 scrips) That are in Sensex (30 scrips) That are in Junior Nifty (50 scrips) Number of DP's DP's branches & service centre Stock exchange connected 50 30 50 103 1. ISE. ludhiana. OTCEI.Number of certificates eliminated (approx.BSE.) 770 Number of companies in which more than 2760 75%shares are dematted Average number of accounts opened per 3672 day since Nov 1996 Presence of demat account holder in the 83% of all pin codes in the country country 9.5 Functions of NSDL 32 .025 10* *NSE. chennai and Ahmedabad 9. Calcutta. delhi.

Maintains investor holdings in the electronic form. Carries out settlement of trades not done on the stock exchange (off-market trades).6 Services Offered by NSDL • • • • • • • • • • NSDL offers a host of services to the investors through its network of DPs: Maintenance of beneficiary holdings through DPs Dematerialisation Off-market Trades Settlement in dematerialised securities Receipt of allotment in the dematerialised form Distribution of corporate benefits Rematerialisation Pledging and hypothecation facilities Freezing/locking of investor's account 9. Electronic credit in public offerings of companies or corporate actions. Transfer of securities. Effects settlement of securities traded on the exchanges. Pledging/hypothecation of dematerialised securities. Receipt of non-cash corporate benefits like bonus rights.• • • • • • • • • enables the surrender and withdrawal of securities to and from the depository (Dematerialisation and Rematerialisation). etc.7 Role in E-Trading 33 . in electronic form 9.

Based on the POA. SPEED-e is a internet based facility for clients of Depository Participants (DPs) that enables the accountholders to submit instructions to their DPs through SPEED-e website on internet. Salient features of SIMPLE are as follows: • • • This facility will be available for password based users (hereinafter referred as Users) of SPEED-e facility. Users will be able to submit Client to Clearing Member Pool Account transfer instructions on SPEED-e website through their mobile phones. The details of the facility are given below: This facility is in respect of demat accounts operated on the basis of Power of Attorney (POA).e. SPEED-e is expected to greatly reduce the time and efforts required in processing the instructions. Mobile phones of the Users should be enabled with GPRS facility for accessing SPEED-e website. Submission of Instruction through Mobile Phone Login Easily (SIMPLE) NSDL launched SIMPLE (Submission of Instruction through Mobile Phone Login Easily). a facility that will enable the password based users of SPEED-e facility to submit instructions on SPEED-e website through their mobile phones.Securities Position Easy Electronic Dissemination-e (SPEED-e) In order to extend the benefits of technological progress to investors. The clients can submit instructions at a time convenient to them from a place convenient to them using SPEED-e website of NSDL. Clearing Members). NSDL has launched SPEED-e services. Many investors execute POA in favour of their stock brokers (i. Submission of Power of attorney based Instructions for Clients Electronically (SPICE) NSDL has introduced of a facility for auto pay-in of securities named SPICE (Submission of Power of attorney based Instructions for Clients Electronically) using the infrastructure of SPEED-e and IDeAS. The accountholders can also view the status of their instructions submitted through SPEED-e on the website itself. Clearing Members (CMs) submit instructions (auto payin) to the Participants (where Clients maintain demat accounts) to debit the demat 34 .

It is available to the users of SPEED-e. custodians and fund managers in respect of Custodian trades. SPICE would enable such CMs to submit digitally signed instructions to Participant through the SPEED-e facility thereby eliminating the need to give paper based delivery instructions to the Participants. Internet-based Demat Account Statement (IDeAS) NSDL launched its first Internet-based initiative. custodians and fund managers will have to access STEADY website on Internet with smart card. NSDL has developed its third Internet-based application. CHAPTER -10 CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED 35 . The information (balances and transactions) is updated on an online basis with a delay of maximum 30 minutes. This facility is available on SPEED-e website for viewing balances and transactions in demat accounts. Securities Trading Information Easy Access and Delivery (STEADY) Using the infrastructure of SPEED-e. Also all downloads obtained by brokers / custodians / fund managers will bear the digital signature of STEADY site. approved by NSDL. In order to use the STEADY facility. bearing digital signature certificate issued by licensed Certifying Authority (CA). in February 2000 now called IDeAS (Internet-based Demat Account Statement). brokers. STEADY will enable electronic communication between brokers.accounts of the Clients. Clearing Members who have subscribed to IDeAS and to those clients whose Participants are registered for IDeAS. STEADY (Securities Trading Information Easy Access and Delivery). which is a means of transmission of trade information electronically across market participants. Further all batches and uploads from brokers / custodians / fund managers will be digitally signed by the respective users and will be accepted by STEADY only after successful verification of digital signature. SPEED (Securities Position Easy Electronic Dissemination).

HDFC Bank. who as an agent of the depository. The Stock Exchange. counterfeit resulting in bad deliveries. are eligible to act as DPs. Ahmedabad. stockbrokers. Calcutta Stock Exchange. According to SEBI guidelines. a statement of account which gives the details of the securities holdings and transactions. The balances in the investors account recorded and maintained with CDSL can be obtained through the DP. Standard Chartered Bank. 36 . Settlement of trades in the demat mode through BOI Shareholding Limited. CDSL offers an efficient and instantaneous transfer of securities. the clearinghouse of BSE.10. dependable and secure depository services at affordable cost to all market participants. The depository system has effectively eliminated paper-based certificates which were prone to be fake. CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading banks such as State Bank of India. custodians. 1999. All leading stock exchanges like the National Stock Exchange. financial institutions. etc. Shri Yashwant Sinha flagged off the operations of CDSL on July 15. banks. etc have established connectivity with CDSL. started in July 1999. The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialisation of his holdings and transferring securities. forged. Honorable Union Finance Minister. at regular intervals.1 Introduction to CDSL A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant (DP). Delhi Stock Exchange. The DP is required to provide the investor. Bank of Baroda. CDSL was set up with the objective of providing convenient. offers depository services to investors. Some of the important milestones of CDSL system are: • • • • CDSL received the certificate of commencement of business from SEBI in February 1999. Union Bank of India and Centurion Bank. Bank of India.

10.2 Vital Statistics Companies Linked CDSL That are compulsory demat trading list (104 81 scripts) That are in Nifty (50 scrips) That are in Sensex (30 scrips) That are in Junior Nifty (50 scrips) Number of DP's DP's branches & service centre Stock exchange connected 39 23 14 18 31 1** **BSE 10. over 5000 issuers have admitted their securities (equities. bonds. into the CDSL system.• As at the end of Dec 2007. and commercial papers). debentures.3 Shareholders of CDSL 37 . certificate of deposits etc. units of mutual funds.

00 750.450.00 750.57 7.00 1.46 200.08 10.46 Bank of India Bank of Baroda State Bank of India HDFC Bank Limited Standard Chartered Bank Canara Bank Union Bank of India Bank of Maharashtra The Calcutta Stock Exchange Limited Others TOTAL 0.000.The initial capital of the company is Rs. Name of shareholders No.07 9.104. The list of shareholders with effect from 5 July. 38 .00 100.91 0.96 10.45 1.4 Board of Directors A professional Board of Directors with vast and varied experience in capital markets and banking is at the helm of affairs at CDSL.00 200.18 6.00 582. and State Bank of India and HDFC Bank. Value of holding (in % terms to total Rupees Lacs) equity 1 2 3 4 5 6 7 8 9 10 11 Bombay Stock Exchange Limited 5.00 674.57 5.00 530.663. 2010 is as under Sr. Bank of Baroda.00 54.50 crores.18 7.91 1.20 5.00 0.CDSL was promoted by Bombay Stock Exchange Limited (BSE) in association with Bank of India.00 100.

5 Management team 39 . Madhu Kannan Mr. R. Prakash R. P S Reddy Mr. Ashishkumar Chauhan Mr. A.Bank of Baroda 10.State Bank of India Sponsor Director . V V Raut Mr.Mr. Chavali Chairman Managing Director and Chief Executive Officer Executive Director Independent Director Sponsor Director – Bombay Stock Exchange Limited Sponsor Director – Bombay Stock Exchange Limited Sponsor Director – Bombay Stock Exchange Limited Sponsor Director – Bombay Stock Exchange Limited Sponsor Director . S S Thakur Mr. Aggarwal Mr. L. Kacholia Mr. Anjan Barua Mr. P. M. D. M. Mayya Mr.

1 Convenience: • Wide DP Network: CDSL has a wide network of DPs. Mr. Satish Budhakar Vice President. Pramod Deshpande Mr. across the country. P S Reddy Mr. Business Development Vice President. offering convenience for an investor to select a DP based on his location. Jitendra Chad Ms. Jignesh Gandhi Mr. Business Development(Currently on deputation to CDSL Ventures Ltd. 40 . Cyrus Khambata Managing Director and Chief Executive Officer Executive Director Chief Technology Officer Sr.6.New Projects Vice President. Sunil Alvares Mr. V V Raut Mr. Bharat Sheth Mr.Vice President. Inspection & Compliance Vice President. Accounts & Administration Vice President.Mr. operating from over 6000 sites. Legal & Company Secretary 10. Information Technology Vice President. Ramkumar K.6 Why a Demat Account with CDSL? 10.Audit. Nayana Ovalekar Mr. as CEO with effect from 7-12-2006) Mr.Operations Vice President.

Certificate of deposits.• • On-line DP Services: The DPs are directly connected to CDSL thereby providing on-line and efficient depository service to investors. Thus. as the entire data is available at CDSL • Contingency Arrangements: CDSL has made provisions for contingency terminals. 41 . A BO can also hold warehouse receipts pertaining to commodities. which registers itself with CDSL for Internet access. Wide Spectrum of Securities Available for Demat: The equity shares of almost all A. If there is any system-related issues at DPs end. in case of any system related problems at the DP's office. B1 & B2 group companies are available for dematerialisation on CDSL. the investor is not affected. • Convenient to DPs: The entire database of investors is stored centrally at CDSL. consisting of Public (listed & unlisted) Limited and Private Limited companies.6. securities. units of mutual funds. These securities include equities. Commercial papers. Internet Access: A DP. bonds. a separate account should be opened for holding warehouse receipts • • Competitive Fees Structure: CDSL has kept its tariffs very competitive to provide affordable depository services to investors.2 Dependability: • On-line Information to Users: CDSL's system is built on a centralized database architecture and thus enables DPs to provide on-line depository services with the latest status of the investor's account. Govt. which enables a DP to update transactions. However. an investor can hold almost all his securities in one account with CDSL. etc. in a demat account. can in turn provide demat account holders with access to their account on the Internet 10. • Meeting User's Requirements: Continuous updation of procedures and processes in tune with evolving market practices is another hallmark of CDSL's services • Audit and Inspection: CDSL conducts regular audit of its DPs to ensure compliance of operational and regulatory requirements.

1 Account opening To utilize the services offered by a depository. the company and CDSL and provides the following services: 10. which prevents any erroneous entry or transfer of securities. unless corrected • • • Data Security: All data and communications between CDSL and its users is encrypted to ensure its security and integrity.• • Dormant Account Monitoring: CDSL has in place a mechanism for monitoring dormant accounts.3 Security • Computer Systems: All data held at CDSL and is automatically mirrored at the Disaster Recovery site and is also backed up and stored in fireproof cabinets at the main and disaster recovery site.6.7. the creditors of the DP will have no access to the holdings of the BO. the transaction will not go through the CDSL system. If the transferor's account number is wrongly entered. Claims on DP: If any DP of CDSL goes into liquidation. any person having investment in any security or intending to invest in securities needs to have a demat account with a CDSL- 42 . • Unique BO Account Number: Every BO in CDSL is allotted a unique account number.7 Services The Depository Participant (DP) is the link between the shareholder. Insurance Cover: CDSL has an insurance cover in the unlikely event of loss to a BO due to the negligence of CDSL or its DPs 10. Helpdesk: DPs and investors can obtain clarifications and guidance from CDSL's prompt and courteous helpline facility. 10.

For receipt of securities into his/her account.7. 10. to his/her DP. to his DP.7. there is no need to submit separate instructions for receipt every time the investor buys securities. if he/she desires so.4 Account Statement Generally a DP sends to the BO.7 Nomination BO accounts also has a facility for nomination in favor of any person.7. A BO can open more than one account with the same or multiple DPs. 10.7. A BO has to submit the request for dematerialisation by submitting the demat request form (DRF) duly completed along with the concerned physical certificates. A BO can maintain a demat account with zero balance in such account. 10.3 Processing Delivery & Receipt Instructions To settle trades done on a stock exchange (on-market trades) and trades. 43 .6 Pledging If the BO decides to pledge any securities in his BO account. which are directly settled between two BOs (off-market trades).7. The investor can approach any DP/s of his/her choice to open a demat account. 10.2 Dematerialisation Dematerialisation is a process by which physical certificates (of shares / debentures / other securities) are converted into electronic balances.5 Rematerialisation Rematerialisation is the process by which the electronic balances held in the demat account can be converted back into physical certificates. Once such a standing instruction is given to the DP. in the same name/s and order. a statement of his account. if there is any transaction in the account or every quarter if the account is not operated during that period. This holder of such demat account is called as "Beneficial Owner (BO)". monthly.DP. BOs submit duly completed delivery instructions in the prescribed form to DP.7. 10. 10. he can avail of the same by submitting the pledge creation form duly completed. a BO can give one time "standing instruction" to DP.

This facility offered by CDSL saves money. lunacy.7.7. All BOs should submit a request in writing to the DP if they wish to record / change their bank account details.10 Bank Account Details SEBI has made it mandatory for companies to print details of bank account of the BO on dividend/interest warrants etc. insolvency or required due to operation of any law.8 Transmission of securities CDSL offers a facility for transmission of balances held in BO account/s (to other BO account/s) if so required due to death. to prevent possibilities of misuse of the warrants. The changes entered by the DP in the CDSL system will be automatically downloaded to all the companies in which the BO is holding securities.10. time and effort for the BO.9 Change in Address A BO who wishes to register his change in address submits his/her request in writing to his/her DP. 44 .7. bankruptcy. 10. 10.

customized and supported by CMC Ltd. This develops a safety net such that the users may devote their entire concentration in business. Centralized database CDSL’s software ‘Central Depository Accounting System’. At CDSL. storing and maintenance of data and its backup. Users have various options to establish connectivity with the CDSL system. Leased Telephone Line or Ethernet network. The hardware has been procured from Hewlett Packard – high-end servers with Cell Board architecture. (CDAS). An allotment of securities in a Rights issue. has been developed.10. Credits of securities arising from demat confirmations. This is arguably the world’s best storage system and the first of its kind to be installed in India. Users also have the facility of a backup by opting for Integrated Subscriber Data Network (ISDN) telephone connection (similar to the one they use at their homes) to ensure 100 % uptime. ensuring that there are no ‘in-transit’ positions between CDSL’s records and those of the users. irrespective of the location. using a VSAT. which makes such securities ready for further use. not only at CDSL’s main site of operations. CDAS system is equipped with centralized database architecture. can be effected during the business day and the allottees can use these securities instantaneously. Transactions of any user. things happen on real time basis. corporate actions and transfers are available instantaneously.8 Cutting-Edge Technology CDSL has installed state-of-the-art hardware and software to ensure the security and integrity of the data. employing HP’s super dome technology and is connected to near fault tolerant storage from EMC² Corporation featuring multiple RAID levels and intelligent diagnostics (automatic disk fault finding system). but also at the Disaster Recovery Site (DRS) situated at a remote location. for instance. This implies that CDSL centrally performs the major activities such as processing. 45 . are updated the moment they are committed into the system.

all in a state-of-the-art secure environment. • The easi access “Electronic Access to Securities Information” (easi) is the internet facility for CDSL DPs. 46 . • easiest - In order to facilitate a CDSL demat account holder to easily adapt to the fast reducing settlement cycle. A DP of CDSL can. easi also provides the status of instructions. 24 hours a day. the significance of live connectivity for DP branches assumes greater importance for enabling settlement of trades within the stipulated time. inter-depository and early pay-in transactions. Through easi. CDSL has introduced “Electronic Access to Securities Information and Execution of Secured Transactions ” easiest. Apart from providing almost real time information of their holdings in their demat accounts. details of past transactions and enables users to take a printout of their statement of account. its Internet-enabled services to empower a demat account holder in managing his securities ‘anytime-anywhere’ in an efficient and convenient manner. CDSL system facilitates the main DP to monitor and control functioning of its branches. on-market. easi also offers a useful facility of daily valuation of the stocks held in a demat account and aggregate value of the portfolio. to get information about their demat accounts through CDSL’s dedicated website. one can also obtain the closing rates of stocks held in an account as of the close of business on the previous day at BSE. easiest is an Internet facility which permits BOs/CMs to submit debit/credit transaction instructions to effect off-market. therefore. CDSL has made it possible for the DPs to provide full range of depository services online from their branches without having to make substantial investment in hardware and software. seven days a week. provide online depository services to BOs at their doorstep. BOs and Clearing Members (CMs) to have anywhere access.Wide network of online depository participants With the introduction of shorter settlement cycles.

at a time and place that you choose to access the information • SMART As a risk management initiative. which stores the digital signature). • Setting up of transactions through trusted account option will be permitted by additional password (PIN).A BO/CM who has entered instructions through easiest need not give a separate debit instruction slip/s to his DP. a BO has to register by providing mobile number of the first / sole holder. Thus. which will be mailed separately. CDSL has launched SMS Alert service. 47 . Under this service. CDSL’s easiest facility gives you anytime-anywhere convenience to operate your demat account and keep you updated about your demat account status. • CMs will have account of choice option only and must procure e-token for authenticating transactions. B. ‘on-market’ and ‘early pay-in’ transfers will be permitted. Trusted account • Trusted accounts are settlement accounts of your CM. Moreover. • Under the trusted account option only ‘off-market’. SMS will also be provided for any credits to the account due to corporate action or IPO. There are two options available on easiest: A. transfer of securities will be permitted to any demat account using a digital signature stored on e-token (device provided by CDSL at an additional cost. all the facilities and benefits of easi are automatically available to a subscriber of easiest.Transfers • In the account of choice option. in bare detail. A BO can specify up to 4 such CM settlement accounts• • Transfer of securities through on-market or off-market will be permitted only to these specified CMs. Account of choice . CDSL will provide SMS on this number when a debit takes place in the BO account.

Each BO in the CDSL system is allocated a unique BO account number known as BO-ID. CDSL’s.Safety and Security CDSL has established a world-class secure and robust accounting and transaction management system. disaster recovery site ensures that data is also simultaneously updated at a remote site. ensuring uninterrupted accessibility of the CDSL system to all users. seamlessly operational state-of-the-art. only a person at DP end who has been pre-authorized by CDSL can access the CDSL system. Efficient settlements With the ever-evolving market practices. based on their convenience. 48 . In other words. which accurately processes over one hundred thousand transactions daily. CMs/BOs can deliver securities directly to the Clearing Corporation (CC) / Clearing House (CH) immediately after trade (early pay-in) or deliver the securities at the pay-in time (normal pay-in). which require multiple methods for pay-in of securities to enhance their operational efficiency. thereby. normal pay-in. The data is continually auto mirrored on the EMC² storage system at the main site to ensure adequate backup and protection of data. just in case the available balance is insufficient to meet the pay-in obligation in full. CDSL provides Clearing Members (CM) with tailored solutions to meet their specific requirements. Moreover. Data backup on high capacity ‘Ultrium’ device is taken daily and stored at a remote site safely. The data and messages communicated between CDSL and its users are encrypted in transmission to protect the interests of all users. CDSL does not provide dial-up access and only authorized users can access CDSL system. CDSL provides facilities to CMs to opt for any of the pay-in options like early pay-in. An additional server is on standby at CDSL’s main site of operations to meet any contingencies. auto pay-in and BO-level pay-in. CDSL system also has a facility for part deliveries.

particularly. Practically all categories of securities such as bonds. units of mutual funds and exchange traded funds. if any. using the multiple convenient pay-in options available in the CDSL system. are available for demat on CDSL. Once pay-in is complete. are also shown). for each delivery instruction are made available to the CM through a simple ‘single‘report. On-Line Inter-Depository Transfers (OLIDT) The OLIDT facility launched in India with effect from December 14. pass-through-certificates etc. without any additional effort from the CMs or their DPs. certificates of deposit. if any. commercial papers.CDSL system enables CMs to carry out auto pay-in for their pay-in based on data received from the CC/CH. any time during the specified business hours. It enables instantaneous transfer of securities between accounts held with different depositories as per the convenience of investors. the total pay-in and shortage quantity. A comprehensive ‘settlement report’ assists the CM to find out which client has given instructions and whether the balance in his account is sufficient to fulfill the pay-in obligations (shortages. The securities received in the CDSL account would be immediately available to meet the pay-in obligations. The OLIDT facility has increased the user's options to utilize securities received in payouts for subsequent transactions. 49 . government securities. debentures. CMs and DPs. for pay-in. Availability of wide spectrum of securities The equity shares of almost all companies listed on all the Stock Exchanges of India are available for dematerialization on CDSL. 2002 connecting CDSL with the other depository on-line is one of its kind in the world.

IOC & GAIL) and to handle the entire process of dematerialization and subsequent disinvestment in Bharat Aluminium Company Limited (BALCO).. Ensuring customer satisfaction CDSL is continually developing ways to automate and enhance processing efficiencies for the benefit of DPs. convenience comes in many forms . VSNL. CMs. individuals. The transaction of BPCL acquiring equity stake in Kochi Refineries Ltd. The user-centric business model finds reflection even in CDSL’s tariff structure.one of which is CDSL’s ever-dependable prompt and courteous help line facility. issuers and BOs. More recently the disinvestments of Government stake in CMC. local market expertise. IBP Ltd. This facility enables DPs. Depository of choice of the Government of India CDSL has the privilege of being the depository of choice of the Government of India for the on-going Public Sector Undertakings (PSUs) disinvestments programme. foreign institutional investors and mutual funds the convenience to handle their securities efficiently at affordable costs. from the Government. clarification or guidance and for speedy redressal of any issues. financial institutions. was also done through CDSL. 50 .Prompt and courteous helpdesk At CDSL. corporate. advanced technological solutions and comprehensive range of depository services are offered to all types of discerning investors viz. CDSL does not collect any custody or ISIN charge from the DPs and the transaction charges have always been pegged at levels reasonable and competitive by industry standards. issuers and CMs to obtain any assistance. and Hindustan Zinc Limited were exclusively done through CDSL. Of India. With CDSL’s extensive DP network. The Government of India chose CDSL exclusively for dematerialization and cross deal transactions in Oil PSUs (ONGC.

103) than CDSL(31) NSDL having more investors than CDSL. NSDL having more numbers of DP's (i.e.CHAPTER-11 FINDINGS • • • • • • Numbers of companies linked with NSDL are more than CDSL. Brokerage is high compared to offline Less privacy due to hacking scandals. 51 . NSDL is connected with 10 stock exchange and DSL with only one.

business online.CHAPTER-12 SUGGESTIONS • • • • • The companies should come up with more and more innovative features in their web portals. trading online and other relevant information. The companies should look after to develop more safe and secure ways of The companies should make maximum efforts to detect fraud cases and minimize 52 . The customer should be educated regularly regarding the new technologies and techniques of transacting them. Brokerage should be low.

Also people trade very less in the bearish market and the company’s profits against brokerage fees soars downwards. waiving a/c opening fee and AMC etc. They also consider the factors like time saving in doing the online transactions. The mantra for success in the current situation will be educating the customers about the benefits of online trading and the amount of ROI that can be generated through it. As the internet penetration is growing in India this business holds a huge potential for growth. In addition. there is an intense competition among the companies and the companies come up with new and new promotion schemes such as discounted and negotiable brokerages.CHAPTER-13 CONCLUSION The online trading is growing with a rapid pace with the rising level of education among the customers. This is due to the fact that at these times people do not prefer to open the DEMAT and Trading accounts. and is expected to reach US$6535. Although some people feel that online trading is not secure but the people doing the trading online is happy about the increasing security concerns among the companies. So the companies have to reduce their account opening fees to attract more and more customers. convenience etc.1 billion in 2004 to US$1492.1 billion in 2005.7 billion by 2015 53 . It is also a found fact that during the bearish market the ratio of online trading becomes very less. The total trading volume of brokerage companies has increased from US$1239. Zero balance accounts. The other factors being that the Indian Investor nowadays wants to deal himself in trading rather than depending upon other middlemen. The year 2008 has not been so good for the stock market and the Sensex and Nifty has been dipping and affecting the business negatively for these companies.

in/ourleaders.asp http://www.co.htm http://www.htm http://www.cdslindia.cdslindia.religare.religare.asp http://www.htm#refh15.cdslindia.6 54 .com/content/ncfm_modules.pdf http://www.in/retail.com/abt_cdsl/introduction.in/downloadables/businesspartners.CHAPTER-14 BIBLIOGRAPHY • • • • • • • • • • • • http://www.nse_india.religare.asp http://www.com/abt_cdsl/whycds.religare.asp http:/www.in/wealth-spectrum.asp http://www.com/abt_cdsl/promo.in/research.in/institutional.asp http://www.cdslindia.religare.in/globalassetmgt.htm http://www.religare.htm http://nsdl.com/abt_cdsl/mngmt.