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Understanding the Role of Depository Participants in the Financial Market

Jul-24-2023Blog by – Mr. Ashish AjmeraRead Time: 4 Min.Word Count: 499
91Understanding the Role of Depository Participants in the Financial Market

The depository system is one of the fundamental pillars of the Indian stock market. The depository services comprise three players – depositories, depository participants and investors.


A depository is an entity that holds stocks and securities of investors in an electronic form. NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) are the two main depositories in India and they are authorised by the Securities and Exchange Board of India (SEBI). A depository is just like a bank where you put your money.


The meaning of a depository participant (DP) is simple to understand. DPs are the agents of NSDL and CDSL. They act as an intermediatory between investors and depositories. DPs need legal authorisation from SEBI to become eligible as stockbrokers.


Role of Depository Participants

DPs perform several functions to ease the burden on investors and depositories:


1. Account Opening

When you want to buy or sell stocks, bonds, IPOs, or any other market security, you need to own a demat account for electronic transactions. DPs help you to open the demat account quickly and conveniently. 


2. Transaction Settlement

A DP takes care of every debit and credit transaction in your demat account for hassle-free trading. They deal with all the trading processes to ensure that all your transactions are cleared and settled effortlessly within the stipulated time.


3. Dematerialisation and Rematerialisation

The depository in stock market requires you to maintain your securities in an electronic form for a safe trading experience. If you hold physical shares, DPs can convert them to electronic form through dematerialisation. DPs can also assist you in rematerialisation – the process of converting online shares into physical paper format.


4. Loan Against Shares

You can pledge your shares as collateral against a loan. When you repay the loan, you can unpledge these shares. DPs can execute both pledging and unpledging of shares on your behalf.


5. Transfer of Ownership

The shares in a demat account can be transferred to another owner in two cases – for sale and shareholder’s death. In both cases, the DPs take charge of the transfer process.


6. Freezing and Unfreezing Demat Account

There are two common reasons for demat account freezing – regulatory (as per instruction of statutory authorities) and voluntary (your own will). DPs can assist you manage freezing and unfreezing your demat account as and when the need arises.


7. Corporate Actions

When you invest in a company, it can give you monetary benefits like interest and dividends or non-monetary benefits like bonuses and right shares. These are called corporate actions. DPs undertake the processing and distribution of these actions into your demat account.


Conclusion

A depository participant in India is responsible for providing intermediary services in the stock market. You should always choose a reputed and reliable DP such as Ajmera x-change to manage your securities. Ajmera x-change also offers a free demat account opening facility and other financial services such as investment advisory and portfolio management.


Get in touch to know more.

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Details of Contact Person Address Contact No. Email Id Working Hours
Client Servicing / Customer care Suresh Munge 63-67, Ajmera House,
4th Floor, Off K.H.Ajmera Chowk,
Pathakwadi, Mumbai – 400 002.
022-40628913 suresh_munge@ajmera.co.in 10:00 am to 6:00 pm
Head of Client Servicing Mr. Dhanesh Bendre's 63-67, Ajmera House,
4th Floor, Off K.H.Ajmera Chowk,
Pathakwadi, Mumbai – 400 002.
022-40628915 dhanesh_bendre@ajmera.co.in 10:00 am to 6:00 pm
Compliance Officer Ashish Ajmera 63-67, Ajmera House,
4th Floor, Off K.H.Ajmera Chowk,
Pathakwadi, Mumbai – 400 002.
022-40628888 ashish@ajmera.co.in 10:00 am to 6:00 pm
CEO / Whole Time Director Ashish Ajmera 63-67, Ajmera House,
4th Floor, Off K.H.Ajmera Chowk,
Pathakwadi, Mumbai – 400 002.
022-40628888 ashish@ajmera.co.in 10:00 am to 6:00 pm

In absence of response/ complaint not addressed to your satisfaction, you may lodge a complaint with CDSL at https://www.cdslindia.com/Footer/grievances.aspx or SEBI at https://scores.gov.in/scores/Welcome.html. Please quote your Complaint Ref No. while raising your complaint at SEBI SCORES/ Depository portal.

Group Companies Members of BSE, NSE, MCX, MSEIL, CDSL, Broking Services, Depository Services
BSE Clearing No.: 911 | NSE Clearing No.: 11858 | MCX Clearing No.: 10665 | MSEIL Clearing No.: 11400 | CDSL DP ID: 30300 | SEBI Regn. No.: IN-DP-715-2022 | SEBI Reg No.: INZ000177531 (Cash/F&O/CDs/MCX)

Attention Investors
1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
4. Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 and BSE vide notice no. 20200731-7 dated July 31, 2020 and 20200831-45 dated August 31, 2020 dated August 31, 2020 and other guidelines issued from time to time in this regard
5. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.
.......... Issued in the interest of Investors

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