OBJECTIVE OF THE STUDY

1. 2. 3. 4. ". '. (. ). *. To assess awareness of clients about Demat system & also the beneficiary of it. To find the view of clients about dematerialization & rematerialization. To know the preferences of clients for dematerialization of physical scrips. To assess the satisfaction of nvestor about the services provided by D!. To find out the nvestor# $lients view about the fees char%ed by D!&s & Depository. To know that in which type of Depository participant a client want to open the demat account. To be aware of the causes by which a client # investor %oes for a special depository participant. To analyse the causes of difference in the char%es of various Depositories. To prove the need of dematerialization in present era etc.

INTRODUCTION TO STOCK EXCHANGE

The earliest record on security on dealin% indicate that tradin% in securities in ndia was in vo%ue as early as 1(*3. There was ma+or increase in the volume of tradin% only durin% the 1* th century. Thanks to the enactment of ndian $ompanies ,ct-1*).- which introduced the concept of limited liability & out break of ,merican $ivil /ar which created hu%e demand for ndian cotta%e in 0urope & which resulted in substantial e1port earnin% of the country. The earnin% were securities market draw the attention of tremendeous investors issue of shares & rampat speculation in 2#3 shares of e1istin%

company but cover the ,merican $ivil /ar come to an end in 1)"3- there was distarous slump in the stock market. The slump resulted in %reat disenchantment with the stock market. The brokers realized that investor&s continence in securities market can be sustained only by or%anizin% themselves into well re%ulated body- with definite rules of re%ulations. This led to the information of the 45ative 3hare & 3tock 6rokers ,ssociation in 1)"(- which later came to be called as the 46276,8 3T2$9 0:$;,5<0=. The formation of 6ombay 3tock 01chan%e was followed by one bein% set>up at ,hmedabad in 1)*4 & the other at $alcutta in 1*.). ,t present secondary market in ndia consists of 24 stock e1chan%es ?includes 530 or 2T$0 @ reco%nized by the %ovt. under two 3ecurities $ontracts ?Ae%ulation@ ,ct-1*"'. These stock e1chan%es are operatin% under the rules- bye laws & re%ulation approved by the %ovt. which constitute ori%inal market for the outstandin% securities. $ompanies raise lon% term funds from capital market. $apital markets if they are available information. Traditionally tradin% on scripts was done under a tree where three or four investors came & traded market the need for proper place to trade on was reco%nized. STOCK EXCHANGE MARKET The 3ecurities $ontracts Ae%ulation ,ct-1*"'- 43tock e1chan%e is an association- or%anization or body of individual wheather incorporate or not established for the purpose of assistin%- re%ulatin% &controllin% business in buyin% sellin% & dealin% in securities. Thus stock e1chan%e is the place or market were

3ecurities- share -debenture bond of various +oint stock company central -state or some %ovt. or%anization local bodies & forei%n %ovt. are brou%ht & sold. t refer the hope - aspiration & fear of people re%ardin% the performance of

economy. THE ECONOMIC FUNCTION OF STOCK MARKET $ertain economic function of stock market is also beneficial for the point of stock market is also beneficial for the point of view of economy as well as the investin% public let us e1amine the more important function. 1@ The 3tock 01chan%e provide a ready market which is continuously available for conservation of e1istin% securities into cash & vise versa. 2@ The stock 01chan%e provides appropriate conditions were by the purpose & sale of securities take place at a reasonable & fair price. 3@ The stock 01chan%e is to protect the interest of investor throu%h strict enforcement of rules & re%ulation with respect with respect to dealin%. 4@ /ith the facilities provide by stock e1chan%e for buyin% & sellin% of securities the demand & supply for a particular securities are eBualized & price fluctuations one kept within reasonable limits.

LUDHIANA STOCK EXCHANGE To fulfill the vital need of havin% a stock e1chan%e in the re%ion -the leadin% industrial tycoons 3h. 3.!.2swal and 3h.6.7.7un+al took serious steps and their hardwork led to the incorporation of Cudhiana 3tock 01chan%e ,ssociation Ctd. C30 was established in 1*)3 with 22. members .3ince its inception C30 has %rown phenomally switched from manual tradin% to screen based tradin% on 1)th 5ovember 1**' and number of listed companies increased from 1'. in *.&s to 4". as on 31st 7arch of which 2*' are re%ional and 1"4 are non re%ional companies. C30 has played an important role in %eneratin% the companies in the state of !D5E,6-;,A8,5,-; 7,$;,C !A,D03; andE,77D & 9,3;7 A0.The daily turnover of lse has increased from few lakhs to ")crores. The numbers of member have now increased to 3.1 out which (" are cooperate and others are individuals. C30 was established to attain the followin% ob+ectivesF 1@ Development of healthy - orderly& transport capital markets. 2@To protects the interest of investor. 3@To assist -reBuest & control trade. 4@ To maintain hi%h standard of commercial honour.

ORGANISATIONAL STRUCTURE The stock e1chan%e is %overned by a board of director- which has si1 elected directors- two director are nominated by 306 & four public representative director. They are e1pert in commerce- accounts- law & business mana%ement. The bond of row includes the e1ecutive director. /ho is full time director taken by the bond- %uidelines & directors received from 306 & seekin% compliance of critical -rules - bye>laws & re%ulation of the e1chan%e. The board of director of the e1chan%e has 13 directors with the followin% representation. 0lected Directors 306 5ominees !ublic Aepersentatives 01ecutive Director ' 2 4 1

n C30 ' elected directors are elected for 3years.5ow after one year new directors will be appointed or reappointed by election.

PRESENT BOARD OF DIRECTORS 7r. ;.3.3idhu 7r.Dina 5ath 3harma 7r.2.!.3ahni 7r.Aa+inder 6handari 01ecutive Director !ublic Aepersentative !ublic Aepersentative !ublic Aepersentative

7r.,+it 3in%h Dua 7r. D.$.9awatra 7r. 7ukul Eoshi 7r.Easpal 3in%h 7r.A.$.3in%al 7r.;ar+it 3in%h ,rora 7r.Aa+nish <ar% 7r.3hobit 9umar 3abharwal

!ublic Aepersentative 306 5ominee 306 5ominee Director Director Director Director Director

RECENT BASED TRADING 1@ 3$A005 6,30D TA,D 5< 7ovin% towards mechanization & modernization. 2n C 50 3$A005 6,30D TA,D 5< in scrips was commenced at C30 on 1) th 5ovember-1**'.The reBuisite software was developed by $7$ Ctd. 6efore start of live tradin%. 7ock tradin% was carried out for more than a month to test the system&s performance to prevent any serious problem. ,fter start of screen based volume of turnover at C30 has risen substantially from an avera%e of As 11crore to an avera%e of As ")crore makin% it si1th lar%est 3tock 01chan%e in ndia after 530-630-$30-D30-,30. The number of scrips traded has also risen from an avera%e of 2'scrips to 41 scrips.The 662?6est-6id & 2ffer@ window on broker&s work station display&s prices of all scrips which have either a bid or an offer in the market- enablin% many more scrips to be traded daily. /ith the availability of prices- bids & offers for all scrips instantaneously on the screen & the speed of matchin% transactions by the system - a much lar%e number of trades can be transacted within the same time period & with %reater transparency- benefitin% brokers as well as investors. G0$T2A?Gersatile 0n%ine Hor $entrlized Tradin% &2nCive Aeportin%s@ system introduced at C30 has few e1clusive featers like 530&630 window displayin% of system is that 662 window displays openin%

price- last traded price- Buantity available etc. !resently C30 connected C,5-/,5 & G3,T.,s G3,T is a mode of communication throu%h satellites and it takes normally 2 seconds to communicate. 2. ON LINE TRADING THROUGH VSAT C30, has chalked out an ambitious pro%ramme to e1pand on line tradin% throu%h G3,T to cities other than Cudhiana and plans to take the tradin% facilities to the door step of investors and members- the e1chan%e has set up 3. tradin% throu%h G3,T has been smoothly conducted in 2ctuber1***. 3) SETTELEMENT GURANTEE FUND t provides %uarantee of all the %enuine based tradin% system of the stock e1chan%e and was implemented a settlement %uarantee fund with effect from 'th ,pril-1**). 2) SETTELEMENT GUARANTEE FUND There is tI2 settlement cycle prevailin% at C30. ,t the end of each settlement- members are %iven scrip wise delivery notes. The members are reBuired to deposit scrips sold by them to the clearin% house on the second workin% day followin% the day of transaction. !urchasin% members make payment a%ainst the delivery also on the aforesaid day. 3@ DEPOSITORY SYSTEM C30 commence tradin% in demat shares from

5ivember1'-1**) by becomin% a participant of 53DC. The e1chan%e has set up in house D! services to facilitate tradin% and settlement in demat securities. 21... investors accounts has opened of 53DC and 2)) investors accounts has opened of $D3C in D! of C30 security Ctd. 4) INVESTORS GRIEVIENCES CELL C30 has made spell arran%ement to handle investors complaints and %rievances. 3o it has set up <$ which receive complaints from investors to ensure their satisfactory redressal. C30 has also set up investor protection

fund? !H@ in Eanuary1**..The fund has corpus of As.3..33 lakhs as on 317arch-2..2.The e1chan%e has also acBuired the membership of 530 and 630 throu%h its fully owned subsidiary T;0 C30 30$DA T 03 C 7 T0D. 2HH $ ,C TA,D 5< ;2DA3 .*."",7>3.3. !7. 30$DA T 03 TA,D0D 0Buity 3hares- 6onds- Debentures.

LSE SECURITIES :

PROFILE

C30 securities limited is a wholly owned subsidiary of C30- it has been formed on ob+ective to achieve %rowth and survival of C30 as an instition throu%h increased volumes and liBuidity in tradin% at the e1chan%e. The main ob+ective of company is,to establish and carry on the business of stock broking as a member of recognized stock exchanges in India or abroad and other allied matters and for this purpose to buy, obtain or acquire stock exchange membership or membership right in India or abroad. The company has authorized and paid up capital of As.3crores. $2!0A,T0 70760A3; ! 2H 530 C30 after careful e1amination about the feasibility of acBuirin% corporate membership of 530 floated a scheme of provision tradin% ri%ht#facilities on 530 market as a sub broker of the C30 3ecurities Ctd on24th December 1*** with waitin% for tradin% ri%hts on 530. Hor option 4,= members were to deposit As.2.".lakhs with As.1...lakh towards 4infrastructure development fund?530@=and for option=6= members were to deposit As2"... in four instalments a%%re%atin% to As 1lakhs towards 4infrastructure development funds?530@=. 2ption J$& was a default option with increased contribution towards 4infrastructure development fund?530@= dependin% upon the time of +oinin% the scheme. The scheme received over whelmin% response from members have subscribed to option 4,= and 1.. members have subscribe to option 46= makin% the total contribution of

As.3.'.crores. The company has obtained cooperate membership of 530 of ndia Ctd. n the capital market se%ment and has deposited As.2.". crores towards 4interest free securities deposits= the company has also obtained 306 re%istration and is in advanced sta%es of re%istration of brokers of the e1chan%e as sub brokers of the company. COPERATE MEMBERSHIP TRADING C30 after careful e1amination about the feasibility of acBuirin% corporate membership of 630 and after consultin% the members at various forums floated a scheme of provisions of tradin% ri%hts on 630 market as sub brokers of the C30 securities on 1.th ,pril2..2. The company has obtained cooperate membership of the 3tock 01chan%e 7umbai and has deposited As ".lakhs towards cost of membership. The company has also obtained 306 re%istration and is in advanced sta%e of re%istration of member broker of the re%istration and is in advanced sta%e of re%istration and is in advanced sta%e of re%istration of member broker of the e1chan%e as sub broker of the company. INDONEXT MODEL C30 can start tradin% in future throu%h indone1t 7odel throu%h it re%ional stock e1chan%es can Eoin hands to%ether and start tradin%. 6ut this proposal is yet pendin%. DEPARTMENTS LISTING DEPARTMENT This department occupies a si%nificant position in the stock e1chan%e. !resently- it is compulsory for the re%ional company to %et itself listed at C30. n order to %et listed- a company should haveF

, minimum capital of As 3... crores. ,t least 2" percent of its eBuity should be offered to public. The company has to deposit an initial listin% fee of As 1".... The company has to deposit an eBual amount of 1 percent of the issue price with the stock e1chan%e and it will be released after the e1piry of si1 months of listin% provided there is compliance of all pre>listin% and post> listin% reBuirements. The schedule of listin% is %iven belowF The companies which have a paid up capital of more than A3 ". crores will have to pay an additional fee of As 2).. for every increase of As " crores pf a part thereof. MARGIN SECTION 7ar%in section is one out of the operational departments and hence it is considered as important section. ts functionin% is classified as followsF /hat are mar%insK 7ar%ins are security deposits levied by an e1chan%e on its brokers. These mar%ins prevent them from occurrin% defaults in the market and control their adverse impact if they still take place. 7ar%ins ensure that counter party to the trade has not denied his ri%ht to fulfillment of the trade. Hactors affectin% effectiveness of tradeF There are two factors which determine the effectiveness of trade. 1.The level of mar%in. 2.The time of collection. 7ar%in constitutes a ma+or portion of total capital employed by a broker. t rou%hly accounts for 4.L of the capital of broker and this percenta%e %oes up as the turnover of broker increases. /ithout mar%in a broker cannot operate and if any time he is in short of few rupees- his terminal is bein% switched off. 3o on the part of- security mar%in is the only way available to C30 for safety- security and miti%ate the risk of default.

Ra !"#a$!%&: The rationale behind establishin% this department isF To prevent brokers in indul%in% in e1cessive speculation. To maintain the 67$ ?6ase 7inimum $apital@ and ,67$ ?,dditional 6ase 7inimum $apital@ and set e1posure limits for each broker member. , broker before startin% tradin% has to deposit 67$ to this department. !resently ,67$ is abolished. 5ow only 67$ is char%ed from brokers. The conditions for deposit 67$ is %iven belowF n the form of.. $,3; HDA TOTAL 67$ As ".... As ".... R' ()))))

The 67$ to be deposited in the form of $,3;#HDA will not e1ceed 1.. percent of total 67$. 7ar%in section allows two types of limits to brokers. These areF G*"'' $!+! : t indicates a%%re%ate of sales and purchase and is calculated on daily basis. t is presently 2" times of 67$ both for 530 and 630. N& $!+! : t indicates the difference between sale and purchase which is on weekly basis and presently it is )." times of 67$ is 530 and ' times of 67$ in 630. The %ross tradin% allowed is ma1imum 2" times. TYPES OF MARGIN 0arlier- before the 306 &s decision to ban any carry forward trade- si1 types of mar%ins were imposed i.e. mark>to>market mar%in- volatility mar%in- carry over mar%in- cash trade mar%in- incremental carry forward mar%in and special mar%in ?imposed after the 9etan !arikh scam@. ;owever the

brokers are now reBuired to pay followin% mar%ins with re%ard to their traders under rollin% settlementF

G,A ?value at risk@ mar%inF Hor the scrips in the compulsory rollin% settlement- the **L G,A based mar%in system would be introduced w.e.f. Euly 2- 2..1. The computation of this mar%in is done by software developed by $hica%o stock e1chan%e. 7ark>to>market mar%inF n addition to G,A mar%in and ,DD T 25,C mar%in as mentioned above- the brokers would also be reBuired to pay mark>to>market mar%in. t is collected on daily basis- broker wise 1..L of notional loss of each member for every scrip- calculated as the difference of his buyin% or sellin% price and closin% price of that scrip at the end of the day. This mar%in is payable in cash or in the form of a bank %uarantee. S,&-!a$ +a*.!#: This mar%in is char%ed only in special or abnormal cases. ,t present this mar%in is char%ed by 630 at very few scrips only. E/,"'0*& +a*.!#: This mar%in is char%ed from brokers at their net position at the evenin% time of the day. The present rate of this mar%in is " percent. 7ark>to>market loss mar%in ?7T7C@F This mar%in is collected from brokers on the difference in the rates of scrips. Hor e1ampleF if a broker , purchase certain scrips for As 1.. in mornin% and rate of that scrips on evenin% become As ).- than this mar%in is char%ed from broker , in the mornin% of ne1t day. C"$$&- !"# "1 +a*.!#: The mar%ins will be collected on TI1 basis.

7embership in 530#630F To become a member of 530 or 630- the broker have to pay As2." lakh in cash to the mar%in section out of which broker can allotted As1 lakh of shares and As1." lakh for limit is allotted a%ainst which he is able for tradin%. SERVICE DEPARTMENTS ACCOUNTS DEPARTMENT: The accounts section of C30 is very important. t prepared income and e1penditure statement and balance sheet of C30. t performs followin% functionsF F0#- !"#' "1 a--"0# ' '&- !"#: To make and receive payments to the outside a%encies. To disburse personal e1penses. To keep the records of all incomin% and out%oin% money and preparation of final statements at the end of financial year. To %et their accounts audited from third party. To cell for listin% fees from the listed companies for which they are informed on 1st ,pril of each year which is determined on the basis of e1istin% capital of company. S"0*-&' "1 10#2': 7embership fee from brokers at the be%innin% with effect from .1..4.2..2 i.e. As 1.... nitial listin% fee from companies i.e. As 1".... ,nnual listin% fee from company. Hines and penalties from brokers. 7aintaince char%es M As 11.3 per room per month from those members havin% room and those not havin% room are char%ed at the rate of As 3... p.a. 3ervice char%es from brokers. nterest earned on fi1ed deposits.

6roker members served a notice for '. days. f the member fails to comply with notice- then he can be e1pelled. A,,$!-a !"# "1 10#2': "L listin% fee to 306 each year. 2.L for providin% services to the investors. !ersonal e1penses. ,dministrative e1pensesF 0lectricity char%es S&-0*! 3 -4a*.&' Telephone char%es G>3,T char%es !rintin% and other char%es 1L of listin% fee is transferred annually to investor protection fund. MEMBERSHIP SECTION This is another important department of C30. The main function of this development is to check the activity of member. The eli%ibility criteria for individual member isF 1. ,%e Cimit 2.Nualification 3.01perience 4.Hinancial !osition 21 to '. 8ears 7atric 38ears e1perience of capital market. 2ne must have 1.-..-... $apital . 2ut of it 1-2"-... in cash form. P*"-&20*& 1"* *a#'1&* "1 +&+5&*'4!, 1.!rior approval letter from 306 for sale. 2.Transfer deed duly filled and stamped. 3.,ffidavit that the member has sold his ticket to the buyer#transfer. 4.!roof of a%e. ".!roof of Bualification. '.$opy of e1perience.

).Catest balance sheet duly attested by $.,.

COMPUTER DEPARTMENT The %rowin% technicalities & increasin% work load has enhanced the mportance of computer section at Cudhiana 3tock 01chan%e. This Department is also known as Oelectronic data processin%O ?0D!@ section. ,t present this section acts as a back bone of the entire stock e1chan%e. This section remains active all the times and is directly or indirectly involved in all the activities of the e1chan%e from the be%innin% of the settlement period till its end. The whole functions of stock e1chan%e would come to half- if the computer section becomes inactive. The functionin% of this section is divided into various sessions which are presented as followsF (.B&.!##!#. "1 4& 2a3: ,t the time of startin% i.e. at )a.m- the servers are booted and net worth of brokers is checked. 2.P*& ",&#!#.: ,t the time of openin%- the investors can put their bid and in case the bids are traded- then they become the openin% rate for that day. 3.O,&#!#.: ,t the time of openin%- the inde1 is checked and the rates are displayed. T*a2!#.: n the time of tradin%- the computer section runs smoothly for tradin%. n case if there is any problem in computer section- it can be solved with help of $7$ CTD. and smooth flow of tradin% is ensured. ?7#3 $7$ CTD. is the vendor who supplies 7DCT0: software to the e1chan%e.@ 4.C$"'!#.: done. 6. P"' -$"'!#.: This is the most important section in which the trade- volume- number of share traded are seen. n case- there is any mismatch between vector and

,t the time of closin%- the computer section checks the volumes traded and evaluation

multe1 that can be elected trou%h 50,T terminal. ,part from above functions- computer section also prepares several reports namelyF 3crip wise statement for each member for each settlement period F 2n 3aturday mornin% Oscrip wise statement of transactionO for the full settlement is taken out for each broker and %iven to them. This report containsF Transaction date 5ame of broker from whom shares are bou%ht # sold 1. ;awala rate 2. Nuantity and rate of shares bou%ht#sold 3. 5et position S-*!, ' a 0' *&,"* 1"* &a-4 '& $&+&# ,&*!"2 : This report is for the internal use of stock e1chan%e. t contains total number of transactions- value of transactions- Buantity sold- and hi%hest- lowest and wei%hted avera%e rate for the settlement. S a &+&# "1 *a#'a- !"# "1 &a-4 '& $&+&# ,&*!"2 1"* &a-4 5*"7&* : t %ives scrip wise transactions of brokers. t contains hawala rate and accordin% to hawala rate difference receivable#payable statement is prepared. This statement is also prepared for individual broker. 8. R&-&!9& "*2&* 2& a!$ ' a &+&# : The computer section %enerates this report for each member. t is %iven to individual brokers. This statement tells the brokers about their net position share i.e. which and how many shares they have to receive from each broker. :. D!11&*&#-& 5!$$ ' a &+&# : ,fter preparin% statement of transaction- this statement is prepared for individual brokers. ;. t contains information on the net amount payable #receivable from other brokers. T*!a$ 5a$a#-&: Hrom difference bill statement trial balance is prepared for all the t contains information on net amount payable# receivable from individual brokers.

brokers. t contains balance carry forward from difference bill statement of each broker. 5et of trial balance is zero. <. S0,,$&+&# a*3 *&,"* : ,fter the preparation of trial balance- supplementary reports are prepared. t contains information for the payment made a%ainst the debit note. (). Ma!# ' a &+&# : t %ives the information re%ardin% debit and credit of scrip and a copy of this statement is sent to broker. ((. Ma!# *!a$: t contains the information re%ardin% the net out%oin% position in the favor of or a%ainst the favor of any broker. (2. Ba#7 &# *3 ' a &+&# : The bank entry statement is sent to the bank. t tells the bank how much amount is to be transferred from or to the broker account. t is the last statement prepared by the 0D! deptt. Hor one settlement period. t containsF 1. 2. 3. 4. ". '. (3. 3erial number 6roker name ,ccount number Debit amount $redit amount <rand total F!#a$ ' a &+&# : t is prepared for the members. t %ives information re%ardin% any dues from them- late delivery- fines etc. 3ome of the above mentioned reports are sent to the brokers so that they can verify the data contained in them and submit corrections- if any. 3ome reports are kept by the stock e1chan%e for their own record. These reports are prepared on daily basis.

CLEARING DEPARTMENT $learin% house takes care of pay in and pay out of securities and funds as well as of bad delivery of securities. ts functions are classified as followsF (. S& $&+&# -3-$&: There is rollin% settlement cycle w.e.f. 1 st,pril 2..2 which is prevailin% at C30 and commenced on daily basis. ,t the end of the settlement date- members are %iven scrip wise delivery notes and have to deposit it with clearin% house as per followin%F TP Tradin% period ?say 7onday@ TI2P !ay in of securities and funds on /ednesday by 1..3. a.m. TI2P !ay out of securities and funds on /ednesday at 1F3. p.m. TI3P ,uction of undelivered securities. TI"P !ay in and pay out of undelivered securities. TI"P $lose out. 2. R"$$!#. '& $&+&# : There is a rollin% settlement cycle prevailin% at the C30 on TI3 basis since .1..4.2..2. $urrently TI2 system are prevailin%. ,t the end of each settlement- members are %iven scrip wise delivery notes. Hor e1ampleF if a member purchase share on 7onday than has to pay in funds on /ednesday but if the purchase is made on Hriday then he has to provide funds on 7onday because on 3aturday and 3unday- the tradin% in every stock e1chan%es of ndia are closed. The same procedure is applied in case of sale of shares. 3. A0- !"#': ,s per rollin% settlement pay>in- pay>out completed- some members make fault for which the clearin% house has the responsibility to settle the pendin% securities. n order to perform the responsibility the clearin% house conducts a auction on Thursday ?tI3@ of pendin% securities. n the tradin% of auction price of securities may be 2.L hi%h#less of closin% price of that day.

4.

C$"'!#. "1 '& $&+&# '-4&20$& : ,fter auction of securities - if still there is no salister ?seller@ on

auction session- in that cases the script is closed out as monetary benefit to the initiator ?buyer@ a%ainst the default of seller ?defaulter@ of securities. LEGAL AND SECRETRIAL SECTION: LEGAL SECTION: /hen two brokers or outside clients do not settle their claims in between themselves and move to courts- the le%al section comes into picture to fi%ht for the cause of investor and a%ainst the defaultin% members. Ce%al section also assist the member and investors to settle their dispute throu%h the arbitration committee- investor %rievance committee so that the dispute may be settled at the earliest without incurrin% heavy dues or amount re%ardin% court feeadvocates fee etc. The main ob+ective of le%al department is to make effective rules and bye laws of e1chan%e and to see the %uidelines circular and any amendments in rules made by 306 are enforced at the appropriate time so that future competitions may be reduced or avoided. ,s the name 4Ce%al section= su%%est- it is clearly mentioned and understood that each and every matter involvin% le%ally is to be solved by the department. SECRETARIAL SECTION: This section is said to be a branch of le%al department and hence the two sections i.e. the le%al and secretarial are +oined into one department called the 4C0<,C ,5D 30$A0TA ,C D0!,AT705T=. The functions and duties of the secretarial department include maintaince of records of minutes likeF 7eetin% of 6oard of Director. 7eetin% of various committees. 7eetin% of members. 7inutes of ,nnual <eneral 7eetin% ?,<7@.

7inutes of 01traordinary <eneral 7eetin% ?0<7@. These minutes are a statutory reBuirement and are preserved by the secretarial department. ,nother function of this department is to send notices as per the direction of 6oard of Directors to the respective director to attend 6oard meetin%s. 5otice is also sent to the members for attendin% annual %eneral meetin% and e1traordinary %eneral meetin%. The notice is prepared very carefully because these contain the a%enda pertainin% to the meetin%. 2nly the a%enda shows the purpose of holdin% the meetin%. ,ll this make it necessary for the secretarial department to have a proper up datin% data- up datin% of law and timely flow of latest information so that the ob+ectives of its functionin% are properly accomplished. t is also the duty of secretarial department to insure that every meetin% held is a 4Galid 7eetin%= havin% the reBuired Buorum. TECHNICAL AND MAINTENANCE SECTION: The technical and maintenance section of C30 is re%ulatin% the activities of electrical and mechanical and security system of C30. t looks after the followin%F ELECTRIFICATION OF BUILDING: ,ll the electrical fittin%s and related arran%ements are provided at the basement of C30,C and %eneral entry to basement is strictly prohibited. The C30,C %ettin% 11.k.v. ?11... volts@ from !.3.0.6. and incurrin% estimated e1penditure of ' to ( lakh per month and considered one out of the ma+or e1penditures of the C30,C. Hurther electrification of buildin% was featured with various transformers- circuit breakers and electrical panels. AIR CONDITIONING OF PLANT: C30,C have its own air conditionin% system- which comprises of 4). T.A ?tonna%e of refri%eration@. 01chan%e consists of 2'2 rooms that are completely air>conditioned. 22 to 2" de%ree temperatures of rooms are

%enerally maintained. The 4). T.A is divided into 4 units comprisin% 12. T.A each unit and have one compressor. MAINTENANCE OF GENERATORS: C30,C maintain 3 %enerators. The capacity of each %enerator is different and due used for different purposes. The 1 st %enerator consists of '.. k.v.a. is used wholly for air conditionin% load. 2 nd %enerator consists of 2". k.v.a. is used wholly for li%htin% purpose of buildin% and 3 rd %enerator consists of (" k.v.a. is used for servers and computer rooms. ,part from above- C30,C also have 2 online ups consists of 2. k.v.a. of electricity for re%ular supply for computers. n fact- ups are the heart of C30 because it ensures re%ular runnin% of computers- which facilitates the tradin%. FIRE FIGHTING SYSTEM: C30,C have maintainin% the hi%h de%ree of fire fi%htin% system. The system consists of ) lakh %allon of water at the basement of the e1chan%e and fire hand rant system at each floor. OTHERS: ,part from above- the C30,C maintains lifts- safety eBuipmentssecurity staff- metal detectors and telephone e1chan%e for its safe and smooth workin%.

PART=B

DEPOSITORY SYSTEM

INTRODUCTION : nherently- ndians are found of possession- /hich may be a flat or house- financial assets or +ewelry. nvestors love to hold the physical share certificates acBuired by them lon% back. The %lobalization is maturin% of ndian capital market has ntroduced the concept of depository- /hich deprives the investors of bein% proudly possessed with the physical certificates . t renders the physical form of certificate evidencin% ownership of shares unless it brin%s about a host of befits to the corporate & investors. The first depository in the world was setup way back. n 1*4( in <ermany . The %rowth was slow in first three decades & at the end of 1**.- the total number of depositories in the world was 32 only & the number may cross 2.. by the end of 2.... Depository in ndia is relatively a new concept as it was introduced in 1**' with the enactment of depositories ,ct&1**'. The use of depository in ndia is voluntary or optional. >HAT DOES THE DEPOSITORY MEANS ? The depository ,ct& 1**'- defines a Depository to mean 4a company formed & re%istered under the companies ,ct=-1*"' & which has been %ranted a certificate of re%istration under sub>section ? ,@ of section 12 of this securities & 01chan%e 6oard of ndia act- 1**2. The term 4Depository 4means a place where 3omethin% is depository for safekeepin%- a bank in which others deposit funds or other deposit securities- usually under the terms of specific depository a%reement. Depository means one who receives a deposit of money- securities- instruments or other property- a person to whom somethin% is entrusted- a trustee- a person or a

%roup entrusted with the preservation or safe keepin% of somethin%. Depository is an or%anization where the securities of the shareholder are held in the electronic from at the reBuest of shareholder throu%h the medium of depository participant. The depository holds electronic custody settlement dates. 5ational securities depository Ctd.?53DC@promoted by D6 -530- is 1st depository of country. Cater on central depository services Ctd. ?$D3C@ was promoted by 630- 6ank of ndia- 6ank of 6aroda etc. THE DEPOSITORY SYSTEM Depository system is concerned with conversion of securities from physical to electronic form- settlement of trades in electronic se%mentelectronic transfer of ownership of shares and electronic custody of securities. The system results in instant transfer as compared to si1 and ei%ht weeks time under physical mode. n depository system- there is no physical script and as such most 2f the problems of fraudulent transfer- take certificate- share lose etc. Girtually disappeared. 0lectronic transfer is faster in comparison to paper /ork. 3tamp duty e1empted and turns over & liBuidity enhances manifold. ,fter %oin% throu%h we are in position to state that the principal function of a depository is to dematerialize by debitin% the transfer&s depository account and creditin% the transfer&s depository account. , depository is very much like a bank in many of its operations. /e can draw an analo%y between the two and subseBuently look at the difference between them- in order to %et a better understandin% of the depository system. of securities on the

NSDL=BANK : AN ANALOGY
6,59 Q ;olds funds in accounts Q Transfers funds between accounts Q Transfers without handlin% cash Q 3afe keeps of money 53DC Q ;olds securities in accounts Q Transfers securities between accounts Q Transfers without handlin% physical securities Q safe keepin% of securities

n a bank the e1chan%e is done by the medium of money- where as in depository it done in securities. na bank money is %iven for safekeepin%. n a depository- securities are kept safely. 6anks hold and transfer fundsDepositories perform the same function with securities. 6ank can transfer funds from one account to another without handlin% cash- a depository can do the same with physical securities. Eust as in the bank an account is opened to avail of the bankin% services- an account has to be opened with a D! for holdin% scripts in the depository se%ment. NSDL @ BANK : THE DIFFERENCE
Q 0ither of holders can si%n instructions. Q 7inimum balance to be 7aintained. Q 0ntitled for interest Q nterest can be earned only by participatin% in stock lendin% 3cheme. Q Dses balances in accounts. Q Doesn&t move a balance in Q ,ll +oints holders can si%n instructions. Q 5o minimum balance reBuired

account without account holder&sauthorization. Q 5omination is kept confidential. Q 3i%nature & photo%raph of nominee to be provided.

n case of transactions in a bank account- any one of the +oint holders can si%n the instructions ? cheBues @- whereas in the depository- all +oint holders are reBuired to si%n all the instructions. 7inimum funds balance !rescribed by the bank has to be maintained in the bank account- no minimum balance in securities is to be maintained in a depository account. , bank uses the funds hold in a bank account for landin% purposes. The securities maintained in a depository account. , depository cannot use the client&s securities balance. 5omination is kept confidential in case of bank account. The photo%raph and si%nature of the nominee is reBuired to be affi1ed on the nomination from for re%isterin% the 5omination for re%isterin% the nomination a depository account. ELIGIBILITY CRITERIA FOR A DEPOSITORY , depository can be promoted by any of the followin% F 1. , public financial institution as defined in section 4, of the $ompanies act1*"' . 2. , bank included in the second schedule to the A6 ,ct- 1*34. 3. , forei%n bank operatin% in ndia with the approval of the A6 . 4. , reco%nized stock e1chan%e. ". , custodian of securities approved by %overnment of ndia. '. ,n institution en%a%ed in providin% financial services where not less then ("L of the eBuity held +ointly or severally by these institutions. (. , forei%n financial services institution approved by %overnment of ndia.

T;0 A0$2AD3 /; $; 3 T2 60 7, 5T, 50D

BY DEPOITORY. The records and documents which is reBuired to maintain by every depository can be started as followin% which have to be preserved for a minimum period of five years. 1. Aecords of securities dematerialized and re materialized. 2. The names of the transferor- transferee. 3. , re%ister and an inde1 of beneficial owners. 4. Details of the holdin%s of the securities of beneficial owner as at the end of each day. ". Details of D! s. '. Details of securities declared to be eli%ible for dematerialization in the depository. (. Aecords of approval- notice- entry & cancellation of pled%e of hypothecation. ). Aecords of instructions received from & sent to- participants- issuersissuer&s a%ent & beneficial owners. *. 3uch other records as may be specified by 306 for carryin% on the activities as a depository. BENEFITS OF DEPOSITORY The followin% can be benefited from depositoryF (. T4& ' "-7 +a*7& A -a,! a$ +a*7& : t is benefited- as depository F 0liminates voluminous & cumbersome paper work . 0liminates bad delivery. ;elps in Buick settlement & reduces settlement time. ;elps in %rowth of capital market. ;elps in virtual paperless tradin% on the stock market.

 Hacilities stock tradin%. 0liminates the problem of odd lots.

2.

T4& !#9&' "*': The investors are benefits because depository provides the

followin% facilitiesF 0ase in the purchase & sale of securities. Hreedom for physical handlin% of securities. Hreedom from paper work like fillin% s lod%in% of T.D ?transfer deed@. 0liminates the risk associated with physical securities. $omputerized record keepin% of securities bou%ht s sold. !rovides more acceptability s liBuidity to securities. !rovides performance in loans a%ainst securities s at sli%htly lesser interest rates. 5o stamp duty on transfer of share. 5o bad delivery problems due to si%nature difference. 0liminates interception # loss of securities in postal transit. 7uch faster payment on the sale securities. Aeductions in time for %ettin% le%al title to securities i.e securities are transferred in the name of purchaser with in a day of completion of settlement. Aeduces cost of purchase s sale of securities. Hreedom from worried of loss on share certificates thou%h theft- mutilationfire etc. 3. T4& -"+,a#3A !''0&* "1 '&-0*! !&': t is benefited because of followin% facilitiesF

0nhances the ima%e of the company.

 Aeduces overall cost of secretarial department. !rotection from loss of securities in postal transit. !rotection from fake securities. Aeduced the cost of issue of securities. !rovides on line# latest details# information of the holders of securities. 0fficient s timely services to investors. Hacilitates further capital raisin%. 6esides the aforesaid benefits- the followin% factors will also lead to compulsory %rowth of the depository concept F Hirstly- 306 has directed that banks- insurance companies- mutual funds & H. . could trade on the stock e1chan%e in & specified scripts only in Demat form. The number of scripts for compulsory Demat was later raised. !resently- as per the 6ye>Caws of the 53DC- '3' securities have been officially admitted under depository. n case of new issue it optional for individual to accept in Demat or physical form.

LEGAL FRAME>ORK
LEGAL FRAME>ORK FOR DEPOSITORY The operations of the depositories are primarily %overned by the depositories ,ct- 1**'- 3ecurities and 01chan%e 6oard of ndia ?Depositories and participants@ Ae%ulations- 1**'- 6ye>laws approved by 306 - and business rules framed in accordance with the re%ulations and bye>laws. The Depositories ,ct passed by !arliament received the !resident&s assent on A0.0' ()B (<<8. t was notified in a <azette on ,u%ust 12 of the same year. The ,ct enables the settin% up of multiple depositories in the country. This was to provide competition n the service. ,t present- two depositories are re%istered with 306 >The 5ational 3ecurities Depository Cimited ?53DC@ and $entral Depository 3ervices ? ndia@ Cimited ?$D3C@. 2nly a company re%istered under the $ompanies ,ct- 1*"' and sponsored by the specified cate%ories of institutions can set up a depository in ndia. 6efore commencin% operations- depositories should obtain a certificate of re%istration and a certificate of commencement of business from 306 . The depository offers services relatin% to holdin% of securities and facilitate processin% of transactions in such securities in book>entry form. The transactions handled by depositories include settlement of market tradessecurities lendin% and borrowin%- pled%e and hypothecation- etc. The ri%hts and obli%ations of depositories- D!&s- issuers and beneficial owners are spelt out clearly in the Depositories ,ct- 1**'. S&- !"# 4: DP !' a# a.&# "1 NSDL: , D! is an a%ent of the depository- who provides various services of the depository to investors. The D! has to enter into an a%reement with the depository to this effect. ,ny investor who would like to avail the services of a depository has to enter into an a%reement with any D! of his choice. The D! will then make the depository services available to the investor.

S&- !"# :: F*&& T*a#'1&*a5!$! 3: The securities held by an investor in the depository are freely transferable from one beneficial owner to another.

S&- !"# ;: O, !"# " 4"$2 '&-0*! !&' !# 2&+a 1"*+: n the depository system- every investor subscribin% to securities offered by an issuer has an option to receive the same in physical form or dematerialized form. f an investor opts for receivin% the securities in dematerialized form- the issuer intimates the depository the details of allotment of security. 2n receipt of this information- the depository enters the name of the allottee as the beneficial owner of that security in its record.

S&- !"# <: S&-0*! !&' 4&$2 !# a 2&,"'! "*3 a*& 10#.!5$&: ,ll securities held by the depository are in dematerialized and fun%ible form.

S&- !"# (): R&.!' &*&2 "C#&* a#2 B&#&1!-!a$ OC#&*: The depository is ownership of security on behalf of a beneficial owner. 6ut as a re%istered owner- it does not have any votin% ri%hts or any other ri%hts in respect of those securities. The beneficial owner is entitled to all ri%hts and benefits as well as sub+ect to all liabilities in respect of the securities held in the depository.

S&- !"# (4: C4"!-& " ", "0 "1 2&,"'! "*3: , beneficial owner may opt out o a depository in respect of any security by %ivin% reBuisite intimation to the depository.

S&- !"# (8: D&,"'! "*3 " !#2&+#!13 $"''&': the depository or participant.

, depository shall

indemnify a beneficial owner for any loss caused due to ne%li%ence of

REGULATIONS OF DEPOSITORIES Depositories ,ct- 1**' 306

306 ,ct- 1**2

306 ?Depositories & !articipants@ Ae%ulations- 1**'

D0!23 T2A8

6usiness Aules 6yelaws

,%reements

,pplicability of ,cts#Ae%ulations

THE DEPOSITORIES ACTB (<<8 The depository act makes provision for the settin% up of multiple depositories in ndia. The investor has been %ranted the option of holdin% securities in a physical or decentralized form. Thus it is a matter of choice for the investor as to whether he wants to avail of the depository services. Depository act- 1**' act provide a le%al trade work for establishment of depositories to record ownership details in book entry form. 3hares in depository mode will be fun%ible. They will cease to have distinctive numbers. The act provides for detailed re%ulations to be framed by 306 as well as detailed bye>laws to be framed by depository with the approval of 306 . 306 has been %iven. !ower under section 1) ?call for information and inBuiry@-

section 1* ?direction@ and section 2" ?power of depository to make by>laws@ of the depository act. OBJECTIVE OF ACT The Depositories le%islation as per the statement of ob+ects and reasons appended to the depositories act- 1**' aims at providin% forF , le%al basis of establishment of depositories to conduct eh task of maintenance of ownership records of securities and effect chan%es in ownership records throu%h book entry. Dematerialization of securities in the depositories mode as well as %ivin% options tot an investor to choose between holdin% securities as at present or hold securities in the dematerialized form in a depository. 7akin% the securities fun%ible. 7akin% the shares debentures and any interest there on of a public listed company freely transferableF and 01emptin% all transfers of shares within a depository form stamp duty.
The depositories ordinance- 306 has notified re%ulation on 1'th 7ay 1**'- which specify the norms for the 10#- !"#!#. a#2 ",&*a !"#' "1 2&,"'! "*!&'. The depository system is very similar to a bankin% environment. Thus while a bank performs the function of holdin% transferrin% and allowin% with drawl of securities. , bank reaches out to masses by settin% up its branchesF similarly- a depository reaches out to the %eneral investor throu%h its a%ents- which are the depository participants. The re%ulations have selected various cate%ories of market participants who are eli%ible to become depository participants. These cate%ories already have a well> established customer interface network and are therefore choice to become the a%ents of a depository. These cate%ories areF

THE SEBI REGULATIONSB (<<8

!ublic financial institutions. Ae%istrars to issue A6 approved forei%n banks operatin% in ndia. Ae%istrars stockbrokers.

3cheduled banks. 3tate financial corporations. $ertified custodians of securities. $leanin% corporations of stock e1chan%es. 5on>bankin% financial companies. The re%ulations specify certain net worth reBuirements for the

last two cate%ories. ,lso 56H$s are allowed to hold securities on their own behalf only and not for clients. 0ntitles desirin% to become depository participants must apply to the depository and are reBuired to be recommended to 306 by the depository. f approved and re%istered by 306 - the depository participant can be admitted on to the depository. The depository has to formulate its own set of criteria for selection of participants. The re%ulations reBuire the depository to list out- thoru%h its 6ye> Caws- the securities that are eli%ible to the admitted to the depository for dematerialization. 0Buity shares- debentures- warrant- bonds- units of mutual funds etc. are part of the list of eli%ible securities. The depository is empowered to set its own criteria for selection of securities & make securities eli%ible to be maintained in the form of electronic holdin% on the depository. Hurther- the re%ulations stipulate that a%reements should be entered into by the followin% entitiesF Depository & every participant. Depository- issuer company & the re%istrar. The draft of these a%reements is to be included in the 6ye>Caws & to be approved by 36 . !articipant & every client. t is important that participants are connected to the depository throu%h a continues electronic communication system. The same is true for re%istrar or corporate communicatin% with depository is also to be connected electronically to clearin% entities. This imposes the need for automated data

processin% systems with necessary system security features & forms one of the criteria for selectin% securities for dematerialization. The depository is reBuired to ensure that sufficient safe%uards are in place to protect the data available with & with the participants. To reduce risk in the operations- the re%ulations stipulate that adeBuate insurance cover be provided for the depository & by the depository participants as well. 3ince the depository acts as the source of information for the re%istrar in terms of providin% beneficial ownership details- the depository has to reconcile data internally with the participant to ensure validity of data. The re%ulation reBuires this reconciliation to be carried out on a daily basis. Hurtherthe depository & the re%istrar will also reconcile balances on daily & periodic basis.

COMMENCEMENT OF BUSINESS
To %et the business commenced by depository- the followin% is reBuired to be performedF R&'!' *a !"#: ,s per the provisions of the 306 ,ct- a depository can deal in securities only after obtainin% a certificate of re%istration from 306 . The sponsors of the proposed depository should apply to 306 for a certificate of re%istration in the prescribed form. 2n bein% satisfied with the eli%ibility parameters of a company to act as a depository- 306 may %rant a certificate of re%istration sub+ect to certain conditions. C"++&#-&+&# "1 50'!#&'': , depository which has obtained re%istrationcan be%in operations only after obtainin% a certificate of commencement of business from 306 . , depository must apply for and obtain certificate of commencement of business from 306 within one year from the date of receivin% the certificate of re%istration from 306 . 306 %rants a certificate of commencement of business if it is satisfied that the depository has adeBuate systems and safe%uards to prevent manipulation of records and transaction. 306 takes into account all matters relevant to the efficient and orderly functionin% of the depository. particularly e1amines whetherF 1. 2. 3. The depository has a net worth of not less than As. 1.. $r.R The 6ye>laws of the depository have been approved by 306 R The automatic data processin% systems of the depository have been protected a%ainst unauthorized access- alteration- destruction- disclosure or dissemination of records and dataR 4. The network- throu%h which continuous electronic means of communications are established between the depository- D!s- issuers and A&T ,%ents- is secure a%ainst unauthorized entry or accessR t

".

The depository has established standard transmission and encryption formats for electronic communication of data between the depositoryD!s- issuers and A&T a%entsR

'.

The physical or electronics access to the premises- facilities- automatic data processin% systems- data stora%e sites and facilities includin% back> up sites- and to the electronic data communication network connectin% the D!s- issuers and A&T ,%ents is controlled- monitored and recordedR

(.

The depository has detailed operational manual e1plainin% all aspects or its functions includin% the interface and method of transmission of information between the depository- issuers- A&T a%ents- D!s and beneficial ownersR

).

The depository has established adeBuate procedures and facilities to ensure that its records are protected loss or destruction and arran%ements have been made for maintainin% back>up facilities at a location different from that of the depositoryR

*.

The depository had made adeBuate arran%ements- includin% insurancefor indemnifyin% the beneficial owner for any loss that may be caused to such beneficial owners by the wron%ful act- ne%li%ence or default of the depository o fits Dps participants or any employee of the depository or participantR and

1..

The %rantin% of certificates of commencement of business in the interest of investor in securities market. f either the issuer ?a

A.*&&+&# 5& C&&# 4& D&,"'! "*3 D !''0&*':

company which has issued securities@ or the investor opts to hold his securities in a demat form- the issuer enters in to an a%reement with depository to enable the investors to dematerialize their securities. 5o such a%reement is necessary where the 3tate of $entral <overnment is the issuer of securities. /here the issuer had appointed a re%istrar to the issue or share transfer- the depository enters into a tripartite a%reement with the issuer & Ae%istrar & Transfer ?A&T@ ,%ent- as the case may be- for the 3ecurities

declared eli%ible for dematerialization. 53DC is dischar%in% the depository> related responsibility of A&T ,%ent for the securities issued by 3tate or $entral <overnment at present. R!.4 ' D "5$!.a !"#' "1 D&,"'! "*!&': Depositories have the ri%hts & obli%ations conferred upon them under the Depositories ,ct- 1**'- the re%ulation made under the Depositories ,ct- 6ye>Caws approved by 306 - & the a%reements made with the D!s- issuers & their A&T a%ents. 0very depository must have adeBuate mechanisms for reviewin%monitorin% & evaluatin% its control- systems- procedures & safe%uards. t should conduct an annual inspection of these procedures & forward a copy of the inspection report to 306 . The depository is also reBuired to ensure that the inte%rity of the automatic data procession systems is maintained at all times & take all precautions necessary to ensure that the records are not lost- destroyed or tampered with. n the event of loss or destruction- sufficient back up of records should be taken- includin% insurance- to protect the interests of the beneficial owners a%ainst any risk. 0very depository is reBuired to e1tend all such co>operation to the beneficial owners- issues- A&T- a%ents- custodians of securities- other depositories and cleanin% or%anizations- as is necessary for the effectiveprompt and accurate clearance and settlement of securities transactions and conduct of business. The depository should indemnify beneficial owners of securities for any loss cause to them due to the ne%li%ence of the D!- however- where the loss is caused due to the ne%li%ence of a D!- the depository shall have the ri%ht to recover it from such D!s. B3&=$aC': , depository is reBuired to make bye>laws %overnin% its operations. The bye>laws have to be in conformity with depositories act- 1**' and the re%ulations made there under and need to be approved by 306 before becomin% effective.

S&*9!-&' "1 D&,"'! "*3: , depository established under the Depositories ,ct1**' can provide any services connectin% with recordin% of allotment of securities of transfer of ownership of securities in the record of a depository. ,ny person willin% to avail the services of the depository can do so by enterin% into an a%reement with the depository throu%h any of its D!s. , depository can provide depository services only throu%h a D!. , depository cannot direly open accounts and provide services to clients. 0very depository in its 6ye>laws must state which securities are eli%ible for demat holdin%. <enerally the followin% securities are eli%ible for dematerialization. ?a@ 3hares- scripts- stock- bonds- debentures- debenture stock or other marketable securities of a like nature in or of any incorporated or other body corporate. ?b@ Dnits of mutual fund- ri%hts under collective investment schemes and venture capital funds- commercial paper- certificates of depositsecuritised debt- money market instruments- %overnment securities and unlisted securities. ?c@ 3ecurities admitted to 53Dl depository are notified to all D!s throu%h circulars sent by email every day. nvestors are informed about these securities throu%h 53DC&s /ebsite Snsdl.co.in>and 503T update Sa monthly newsletter of 53DC. FUNCTIONS OF DEPOSITORY D&+a &*!a$!%a !"#: 2ne of the primary functions of depository is to eliminate or minims the movement of physical securities in the market. This is achieved throu%h dematerialization of securities. Dematerialization is the process of convertin% securities held in physical form into holdin%s in book entry form. A--"0# *a#'1&*: The depository %ives effects to all transfers resultin% from the settlement of trades and other transactions between various beneficial owners by recordin%s entries in the accounts of such beneficial owners.

T*a#'1&* a#2 *&.!' *a !"#: , transfer is the le%al chan%e of ownership of a security in the records of the issuer. Hor effectin% a transfer- certain le%al steps have to be taken like endorsement- e1ecution of a transfer instrument and payment of stamp duty. The depository accelerated the transfer process by re%isterin% the ownership of entire issue in the name of the depository. Dnder a depository system- transfer of security occurs merely by passin% book entries in the records of the depositories- on the instructions of the beneficial owners. P$&2.& a#2 H3," 4&-a !"#: Depositories allow the securities placed with them to be used as collateral to secure loans and other credits. n a manual environment- borrowers are reBuired to deliver pled%ed securities in physical form to the lenders of its custodian. These securities are verified for authenticity and often need to be transfer in the name of order. ,ll this takes time. t also has a money cost by way of transfer fees or stamp duty. f the borrower wants to substitute the pled%e securities- these steps have to be repeated- use of depository services for pled%in%#hypothecatin% the securities makes the process very simple and cost effective. The securities pled%ed#hypothecated are transferred to a se%re%ated or collateral account throu%h book entries in the records of the depository. C"*,"*a & A- !"#': , depository may handle corporate actions in two ways. n the first case- it merely provides information to the issuer about the persons entitled to receive corporate benefits. n the other case- depository itself takes the responsibility of distribution of corporate benefits. L!#7a.&' C! 4 -$&a#!#. '3' &+: /hether is a separate cleanin% corporation attached to a stock e1chan%e or a cleanin% house ?department@ of a stock e1chan%e- cleanin% system performs the functions of ascertainin% the pay>in ?sell@ or pay pay>out ?buy@ of broker who have traded on the stock e1chan%e. ,ctual delivery of securities to the cleanin% system from the sellin% broker and delivery of securities from the cleanin% system to the buyin% broker is done by the depository. To achieve this- depositories and the cleanin% system should be electronically linked.

;avin% understood the depository system- let us now look at the or%anization and functions of 5ational 3ecurities Depository Cimited ?53DC@.

ADMISSION OF PARTICIPANTS
To %et properly about the admission of participants- it reBuires to know firstly about depository participants ?D!s@. Depository participants are described as an a%ent of the depository. They are the intermediaries between the depository and the investor. The relationship between the D!s and the depository is %overned by an a%reement made between the two under the depositories ,ct. T n a strictly le%al sense- a D! is an entity who is re%istered as such with 306 under the provisions of the 306 ,ct. ,3 per the provision of this ,ct- a D! can offer depository related services only after obtainin% a certificate of re%istration from 306 . ADMISSION OF PARTICIPANTS ,ny person or institute desirous to become a participant can file an application with 306 . The applicant shall submit form J0& specified under 306 ?depositories & participants@ re%ulations- 1**' and the anne1es specified thereunder alon% with the followin% documentsF 6usiness history of the applicant for the last three years. 5et worth as certified by chartered accountant as per the latest audited accounts in the manner specified in anne1ure ,. $opies of the annual reports of the last three years. The eli%ibility are prescribed by the 306 ?D&!@ re%ulations1**' and the 6ye>laws of 53DC. ;avin% followin% eli%ibility an applicant can take admission as a participant. ELIGIBILITY ?a@ ?b@ The applicant should have a minimum net worth of As. 1 croreR The applicant should not have been convinced in any of the five years immediately proceedin% the filin% of the application of funds and

securities- theft- embezzlement of funds- fraudulent conversion or for%eryR ?c@ The applicant shall be reBuired to furnish details of its board of directors#authorized officials- who shall be responsible for actin% on behalf of the participantsR ?d@ The depository may conduct entrance e1amination and#or interviews- to e1amine the knowled%e of the participant and its staff related to the D!s operational- functional and technical aspectsR ?e@ ?f@ The application should have adeBuate office space e1clusively for depository operations and adeBuate infrastructureR The participants should follow the hardware and software reBuirements as specified in the anne1ure $ and the participant which is a $$ shall follow the hardware and software reBuirements as specified in anne1ure $$R ?%@ Hor the purpose of satisfyin% itself re%ardin% the eli%ibility of the applicant to become a participant- the depository may carry out an inspection of the office and facilities of the applicantsR ,fter fulfillin% the eli%ibility conditions and payment of fees- the applicant shall be eli%ible to become a participant with effect from a date on which it is re%istered with 306 ?D&!@ re%ulation 1**' and %ets a re%istration no. i.e. D!> D no. The depository shall provide an application software called the depository participant 7odule D!7 ?D!@ to the participant and any up%radations or modification to such software on payment of such fees as may be determined by the depository. STEPS FOR JOINING AS A DP 53DC. 0ntity desirous of becomin% a D! makes an application to

53DC verifies the application form. 53DC may re+ect- ask for further information and#or clarifications- or ask to remove the defects it the application .

53DC ensures that all systems like hardware- softwaretelecommunications- data processin%- information stora%e- back upalternate connectivity- internal controls are in place and confirms to 306 .

correctness. format.

53DC forwards the application t 306 for re%istration alon% with its recommendations. 306 reviews the application for completeness and t may re+ect the application- or ask for further 306 %rants certificate re%istration. The D! pays re%istration fee- security deposits- insurance fee and other collateral to 53DC as stipulated under its bye>laws. The D! and 53DC si%n a a%reement in the prescribed 53DC activates the D! module at the applicant&s ?now a D!@ premises. D! be%ins operations.

clarification#information from the D! or 53DC.

DEPOSITORIES IN INDIA
The pro%ress of depositories in ndia is really a tribute to ndia&s ability to adopt to chan%e. The emer%ence of script less tradin% and the %lobal e1perience of depositories initiate the services of depositories in ndia. n the counties like 3in%apore- Hrance Denmark- 5orway has %iven depository services to the investors. ,t the present time in ndia- two depositories have %ot the re%istration from 306 . The two are stated as followin%F 1. 2. 3. 5ational securities depository limited $entral depository services limited This business has three components to namelyF nvestor&s trust 0fficiency- and $osts > ENSDL) > ECSDL)

FEES AND DEPOSITS OF NSDL The followin% 6usiness Aules hall be effective from 7ay 1- 2..2. FEE PAYABLE BY ISSUERS FEE FOR DISTRIBUTION OF NON=CASH CORPORATE BENEFITS ?i@ n case of offers for sale by an offerer or disinvestments by <2 or issue of shares arisin% out of bonus- ri%hts- public issues- shares split- mer%erdemer%er- etc.- a fee at the rate of ...2L ?two basis points@ of the value of securities based on the market price or the offer prices as on the date of allotment- as the case may be- or As. 2. per record whichever is lower- shall be char%ed to the ssuer- sub+ect to a minimum fee of As. ".. per corporate action.

?ii@
?iii@ ?iv@

n case of conversion of shares of non pari>passu to pa ri>passu- partly>

paid to fully>paid etc.- no fee shall be char%ed. n case issue of $ommercial !apers- a flat fee of As. 1.- ... shall be levied on the ssuer for all issues of $ommercial !apers durin% the calendar year. n case issue of short term debt instruments viz.- certificate of deposits7 62A linked etc.- a flat fee of As. 1.-... shall levied on the ssuer for 1. such issues made in a calendar year. !rovided however that an additional fee of As. 1.-... shall be levied on the ssuer for subseBuent 1. issues and so on.

ONE TIME CUSTODY FEES ,n ssuer may pay a one time custody fee to 53DC at the rate of ..."L on the market capitalization of the company. The market capitalization of a company will be determined on the basis of the avera%e market price for a period of 2' weeks precedin% the date on which the company a%rees to make such payment. $onseBuent upon such payment- 53DC shall not levy any custody fee on the !articipants. f a company opts to pay the aforesaid on time fee- it will also be reBuired to a%ree to pay on the newly issued shares- a custody fee at the rate of ..."L ?five basis points@ on the value of shared calculated on the basis of issue price of newly issued shares. n case the company does not pay this amount53DC shall char%e custody fee as per provision mentioned at Aule 21.2.3 hereunder. ;owever- the ssuer shall not be reBuired to pay any custody fee on any subseBuent issue of 6onus shares by the company. FEE PAYABLE BY PARTICIPANTS ENTRY FEES 0ach !articipant shall pay- to the Depository- non>refundable 0ntry Hee or As. 2"-.... TRANSACTION RELATED FEES The followin% transaction related fees shall be payable by the

!articipants to the Depository.

SETTLEMENT FEE ?i@ ?ii@ , settlement fee at the rate of As. ) per debit instruction in a $lient&s account shall be char%ed to the !articipant of the $lient. , settlement fee at the rate of As. 1... per instruction in respect of securities received from the $learin% $orporationinto the Aeceipt>in account of each $learin% 7ember maintained with the !articipant sub+ect to a minimum of As. 1... and a ma1imum of As. 2.-... per Buarter per $7 ,ccount shall be char%ed to the !articipant. ?iii@ , settlement fee at the rate of As. ) per debit instruction for transfer of securities by way of inter>settlement transfers in the $7 ,ccount ?s@ shall be char%ed to the !articipant. ?iv@ , settlement fee at the rate of As. ) per debit instruction for transfer of securities from the $7 account of a $learin% 7ember to the $7 account of another $learin% 7ember shall be char%ed of the deliverin% $learin% 7ember. !rovided however that no settlement fee shall be char%edF ?a@ ?b@ in respect commercial papers and short term debt instruments such as certificate of deposits- 7 62A linked papers etc.R and in case ofF i@ ii@ transfers necessitated by transmission on death of the $lientR and transfer of the accounts of $lients from one !articipant to another as a conseBuence of e1pulsion or suspension of such !articipant. PLEDGE FEE , fee at the rate of As. 2" per instruction for creation of pled%e#hypothecation shall be char%ed to the !articipants of the

pled%or#hypothecator. 5o fee shall be char%ed when a pled%e#hypothecation is closed or invoked. LENDING AND BORRO>ING FEE , fee at the rate of As. 2" per instruction shall be char%ed to the !articipant of the borrower in respect of credit of securities to the account of the borrower. 5o fee shall be char%ed at the time of repay or recall of securities. CUSTODY FEES , custody fee at the rate of As. ..". per month ?As. ' per annum@ for securities held under each 3 5 ? nternational 3ecurities dentification 5umber@ in each and every account maintained with the !articipant shall be char%ed to the !articipant- on a monthly basis. n case an account has no security balance- such an account shall also be char%ed at the rate of As. ..". per month. !rovided however that no custody fee will be char%ed on the securities of companies which have paid one time custody fee to 53DC.
FEE FOR DEMATERIALIFATION D REMATERIALIFATION

5o fee shall be char%ed by the Depository on dematerialization reBuests. ;owever- in case of rematerialiszation reBuest- a flat fee of As. 1. per certificate shall be char%ed to the !articipant. SECURITY DEPOSIT 0very !articipant shall pay to the Depository As. 1. lakh by way of interest free refundable security deposit. ;owever- a $learin% $orporation or a $learin% ;ouse of a 3tock 01chan%e will be e1empt from payment of security deposit. MINIMUM FEE n case the total fee billed to the !articipant in a financial year is less than the minimum fee As. 1-".-... then the !articipant shall be char%ed the difference thereof. FEESB CHARGES AND DEPOSITS OF CDSL

The !articipant shall- apart from such fees- char%es and deposits may be payable to 306 - pay to $D3 such fees- char%es and deposits as are specified herein under. n the event of the !articipant failin% to make payment of the fees- char%es or deposits- as the case may be- by the respective due dates specified in bills raised by $D3 hereto then- in addition to any other ri%hts or remedies that may be available to $D3 hereto then- in addition to any other ri%hts or remedies that may be available to $D3 a%ainst the !articipant- the !articipant shall be liable to pay interest to $D3 on such delayed payment at the rate of 1)L per annum or the prevailin% 6ank Aate whichever is hi%her- or part thereof on the Buantum of such delayed payment. 3uch fees- char%es and deposits shall be sub+ect to any chan%e or revision fro time to time by $D3 provided however that $D3 shall- before effectin% any increase in the feeschar%es or deposits payable by the !articipant as aforesaid- %ive the !articipant at least one month&s notice in that behalf.=
C4a*.&' Pa3a5$& " A--"0# Ma!# &#a#-& C4a*.& ,ccount 7aintenance $har%e 5il for ndividuals#;uH&s# $D3C per 6eneficial 2wner account trusts#5A &s As. ".. for others per annum T*a#'a- !"# C4a*.&' Aefer point 12." $ustody #!er 3 5 $har%es 5il based on market value of securities held in the account. Dematerialization Aematerialization O 4&* C4a*.&' 5il , fi1ed fee of As. 1.#> will be payable per certificate. ;owever- no fee shall be collected in case of %overnment securities where rematerialization is used for transfer to other 3<C participant account and $D3C Pa* !-0$a*'

units of DT and other mutual funds where rematerialization is used for redemption# repurchase.

NOTES: The Tariff indicates the chares collected by $D3C from Depository !articipants. D!s can prescribe their own schedule of char%es for their 6os. 6illin% will be done at the end of each month. Tariff for other services will be announced as and when introduced. The tariff indicted above is sub+ect to periodic review.

BASIS OF CALCULATION ACCOUNT MAINTENANCE CHARGE The char%es are for each 62 account opened e1cept for accounts opened for individuals#;DH&s #5A &s#trusts. The char%e will be pro>rated monthly from the month in which the account is opened till the end of the financial year. Hor subseBuent financial years- the same is payable at the be%innin% of the financial year.

NSDL=A PROFILE
5ational 3ecurities Depository Cimited ?53DC@ is a public limited company- which is promoted by followin% four ma+or financial institutionsF Dnit Trust of ndia ?DT @ ndustrial Development 6ank of ndia ? D6 @ 5ational 3tock 01chan%e ?530@ 3tate 6ank of ndia ?36 @ 53DC ?situated at Hrade /orld- 4th floor- 9amlal 7ills compound 3enapati 6apat 7ar%- Cower !arel- 7imbai>13@ is mana%ed by the eBuity & the debt market was incorporated on D&-. (2B (<<6. t was re%istered with the 306 on : 4 J0#&B (<<8. The followin% banks have taken membership of 53DC as depository participantF ?1@ ?2@ ?3@ ?4@ ?"@ ?'@ ?(@ ?)@ ?*@ ?1.@ ?11@ ?12@ ,5U <rindlays 6ank Cimited $anara 6ank $enturion 6ank Cimited ;DH$ 6ank Cimited D6 6ank Cimited !un+ab 5ational 6ank !un+ab & 3ind 6ank 3tate 6ank of ndia 3atyam $omputers Aayban san DT 7aster share Aeliance $apital

?13@ ?14@ ?1"@

2riental 6ank of $ommerce Aeliance ndustries nfosys ndustrial Development 6ank of ndia ? D6 @ is the lar%est

development financial institution in ndia. Dnit Trust of ndia ?DT @ is the lar%est 7utual Hund in ndia established under UTI A- B (<83 with a view to provides a fair- efficient & transparent securities market to investors all over the country- has emer%ed in ndia. 36 - havin% a wide network of branches all over the country- is the lar%est commercial bank in ndia. 53DC- the first depository in ndia- commenced operations on 5ovember .4- 1**'. ;oldin% & handlin% of securities in electronic form eliminates problems that are normally associated with physical certificates- like mutilation due to careless handlin%- loss in transit- problems of bad delivery etc.- Hurther it facilities faster settlement cycles. t has been established with a view to provide holdin% of securities on the electronic form & settlement of trades done for these electronic holdin%s as reBuired by the ,ct. 53DC is responsible to every individual investor who holds electronic balances with the depository participant acts as an a%ent of 53DC for providin% its services to the investors. Dpto now- the 53DC has desi%ned the software for operatin% system in such a way the software system at the depository & the D! office are connected. Thus a hi%hly inte%rated setup for maintenance of investor accounts throu%h D! has been developed & implemented. 53DC has access to all the accounts of individual investors maintained by the depository participant to ensure adeBuate control. 53DC&s operatin% system also maintains continuos electronic connectivity with the re%istrar & transfer departmenta%ents of the companies whose securities can be dematerialized in 53DC. This done in order to perform a daily reconciliation of all the account balance held with 53DC- 6!$C- $A 3 C- ,$- AEC- $ $ - C7CV;DH$ & siemens are bein% admitted to the depository as securities eli%ible for initial

dematerialization. 3ubseBuently other securities will also be admitted provided the companies satisfy the eli%ibility criteria mentioned earlier. FUNCTIONS OF NSDL 53DC performs the followin% functions throu%h D!&sF 0nables the surrender & withdraw of securities & from the depository ?dematerialization & re>materialization@. 7aintains investor holdin%s in the electronic form. 0ffect settlement of securities traded on the e1chan%es. $arried out settlement of trades not done on the stock e1chan%es ?off> market trades@. Transfer of securities. !led%in%#hypothecation of dematerialization securities. 0lectronic credit in public offerin%s of corporate actions. Aeceipt of non>cash corporate benefits like bonus ri%hts- etc.- in electronic form. 3tock lendin% & borrowin%.

SERVICES OFFERED BY NSDL 53DC offers a host of services to the investors throu%h its network of D!sF 7aintenance of beneficiary holdin%s throu%h D!&s. Dematerialization. 2ff>market trades. 3ettlement in dematerialized securities. Aeceipt of allotment in the dematerialized form. Distribution of corporate benefits. Ae>materialization.

!led%in% & hypothecation facilities. Hreezin%#lockin% of investor&s account. 3tock lendin% & borrowin% facilities. 53DC char%es the D!&s & not the investors directly. These

FEES STRUCTURE OF NSDL char%es are fi1ed. The D!&s in turn are free to char%e their clients i.e. the investor for their services. Thus there is a two>tier fee structure. SETTLEMENT OF DISPUTES ,ll disputes differences & claims arisin% of any dealin%s on the 53DC- can be settled under the ,rbitration & conciliation ,ct- 1**'. SYSTEM VIE> OF NSDL DEPOSITORY SYSTEM The fi%ure %iven below depicts a system view of the 53DC depository systemF ELECTRONIC LINKAGE ISSUER EXCHANGES ECCACH)

ELECTRONIC LINK

NSDL

ELECTRONIC LINK

DP

DP

BROKERACM

INVESTOR INVESTOR

BROKERACM

,ccount holders ?investors@ open account with the Dps. The account details- entered in a computer system maintained by D!s called D!7- are electronically conveyed to the central system of 53DC called D!7. $ompanies who have a%reed to offer Demat facility to their shareholders use a computer system called D!7 ?3;A@ to connect to the 53DC central system. D!7 ?3;A@ may be installed by the company itself of throu%h its A&T a%ent. This system is used to electronically received Demat reBuests- confirm suck reBuests or to receive beneficial owner data ?6enpos@ from the depository . 3tock e1chan%es receive pay>in or to pay>out usin% a computer system connected to 53DC called D!7 ?$$@. ,ll the computer systems installed by D!s ?D!7>D!@- issues ?D!7>3;As@ and stock e1chan%es ?D!7> $$@ are connected to 53DC central system ?D7@ throu%h G>3,T or leased lines. These are collectively called 6usiness !artner 3ystem. CONNECTIVITY The computer system used by Dps issuers- A&T a%ents and stock e1chan%e may be connected to 53DC central system throu%h G>3,T network of leased line network. 53DC uses 530&s G>3,T network for connectivity purposes. Thus- G>3,Ts used by 530 brokers can connect to 53DC if the software supplied by 53DC is used.G>3,T uses satellites for communication purposes. 3ome business partners may connect leased lines provided by 7ahana%ar Telephone 5i%am Cimited ?7T5C@- Dot and others. NSDL=KEY MILE STONES S&, . (<<6 D&-. (<<6 A0.. (<<8 N"9. (<<8 D&-. (<<8 : : : : : Draftin% of the Depositories 2rdinance 53DC ncorporation Depositories ,ct. 53DC nau%uration $ommencement of Demat tradin% at 530

J0#& (<<: D&-. (<<: Ja#. (<<; Ma*. (<<; D&-. (<<; Ja#. (<<< Ma3 (<<< F&5. 2))) Ma3 2))) J0#& 2))) J0#& 2)))

: : : : : : : : : : :

Total value of Demat securities at 53DC $rosses D3W 1 bn. $ommencement of Demat Tradin% at 630. $ompulsory demat tradin% for investors. Total value of Demat securities at 53DC crosses D3W " b. ntroduction of Demat of <overnment 3ecurities. nstitutional

$ommencement of $ompulsory tradin% for detail investors. 53DC 2perations for $7s. nvestor accounts with 53DC cross 2." bn. $ommencement instruments. *)L settlement in demat form. of Demat of Debt launches 7odule. 3!00D> 5$H7>Depository

53DC launches internet based service>

SERVICE OF STANDARDS
The Depositories ,ct- 1**' reBuires that clients can avail services of a Depository throu%h D!s. $aused to this reBuirement a new business entity has created called 4Depository participant=. , D! has to deal in business with the followin% characteristicsF 3ensitive and demandin% clientsR ntense competition on the price pront due to which the profit mar%ins are under tremendous pressureR This profit mar%ins reBuire hi%h volume of clients#transactions for operatin% the D! services profitabilityR and ;i%h volume of business is error>prone- unless supported by appropriate systems and Buality of manpower. This chapter attempts to set out some points to these service standards- which the D!s may want to establish but this list is only indicativeand not an e1haustive. 3o- in the response to client the service standard may be up%raded#chan%ed. The competitive market may also be one of the causes. OFFICE AMBIENCE The front office ambience should be pleasant and should provide minimum conveniences for the clients to conduct their transactions. The wailin% space should be proportionate to the number of clients that may visit the office to conduct their business. ,t least followin% facilities should be available for at every office#branch !rovision to write instructions. ntroductory literature#booklets. Display branch. of a list of services offered from the service of D!.

center#demat#remat#account#transfer#pled%e service are available at that

Catest list of 3 5s available for dematerialization. nBuiry counter for findin% out balances in client account.

ACCOUNT OF OPENING ,s in any service industry- the first point of contact is the most important point in customer relationship mana%ement. Hor investors- the process of account openin% is the first interaction with a D.!. This is the sta%e at which the client interacts with the D! and one that will make a permanent impression about the servicin% capabilities of the D!. ,lso- this is the sta%e at which the client may have several Buestions that need to be answered and proper %uidance provided. DEMAT PROCESS The demat process reBuires defacin% of securities which will make the security certificate undeliverable unless the demat formalities are completed. Therefore- the client should be assisted in ascertainin% whether the securities in Buestion are available for dematerialization. $lients should be helped in filin% up the demat reBuest properly. The D! should attend to the area of Demat re+ection- with care and caution because it results a %reat inconvenience to the client. TRADING AND SETTLEMENT This is an area where the D! must take immense care whil acceptin% and processin% reBuests for transfer of securities from the account of his client to another account. The aspects listed below should be kept in mind. 0nsure that the delivery instruction book %iven to each client has pre> printed serial numbers and client> D. nform clients about the pay>in deadline of the stock e1chan%e and the deadline of the D!.

nform clients about

the future detailed instructions facility and

encoura%e them to use this facility. 0nsure that the si%natures of all holders are obtained case of +oint accounts. $lients should be made aware of the account freezin% facility.

GENERAL SERVICES 3ince clients are free to choose their D!s dependin% on criteria like service standards- convenience of location- affordability- providin% efficient and timely services is important for all D!s if they&ve to complete effectively. Hactors in %eneral services that they should keep in mind includeF Timely issue of transaction statements. 3. days notice to clients re%ardin% chan%es in the structure of fees. !rovide the latest list of companies available for demat. 7aintain the critical instructions of clients and %ive them a feedback on each one of those instructions.

NSDL SERVICES
The J53DC& is providin% many services to D!&s & clients. Ae%ardin% this the followin% depicted fi%ure will disclose more clear meanin% to it.

NSDL SERVICES

CORE SERVICE

SPECIAL SERVICE

, $ $ 2 D 5 T 2 ! 0 5 5 <

T A , 5 3 7 3 3 2 5 & 5 2 7 5 , T 2 5

D 0 7 , T & 0 7 , T

T A , D 5 < & 3 0 T T C 0 7 0 5 T

! C 0 D < 0 & ; 8 ! 2 T ; 0 $ , T 2 5

3 T 2 $ 9 C 0 5 D 5 < & 6 2 A A 2 / 5 <

$ 2 A ! 2 $ 2 A ! 2 A , T 0 , $ T 5 2 5 3

! D 6 C $ 3 3 D 0 3

D 0 6 T & 5 3 T A D 7 0 5 T 3

< 2 G T & 3 0 $ D A T 0 3

To make above depicted fi%ure more to more clear /e reBuire to describe each one by one such as followF

CORE SERVICES EI) ACCOUNT OPENING +ust as in a bank- openin% an account is the first step that an investor intends to hold scrip in demat form in the depository system. ,ny person desirin% to become a client of the D! shall make an application as per the forms- which have been laid out in ,nne1ure. The participant shall ensure that the application form submitted by the client is completely for submitted by the client is completely filled & properly si%ned. T3,&' "1 A--"0# '

B&#&1!-!a$ OC#&* A--"0#

C$&a*!#. M&+5&* A--"0#

I# &*+&2!a*3 A--"0#

H"0'&

N"#=H"0'&

N"*+a$ P""$

V3aG H"0'& Ba2$a

, D! may be reBuired to open three cate%ories of accounts for clients> 6eneficiary account- $learin% 7ember ,ccount & account. ntermediary

, 6eneficiary account is an ownership account. The holder#s of securities in this type of account won these securities. The $learin% 7ember ,ccount & ntermediary account are transitory accounts. The securities in these accounts are held for a commercial purpose only.

, $learin% 7ember ,ccount is opened by a broker or a $learin% 7ember for the !urpose of 3ettlement of Trades.

,n ntermediary account can opened by a 306 re%istered intermediary for the purpose of stock lendin% & borrowin%. Gya+ 6adla !ool ,ccount can be opened by broker of a stock e1chan%e that permits 6adla tradin%. This account can be opened only with a clearin% house or clearin% corporation. This account can also be used for ,C67 ?,utomated Cendin% & 6orrowin% 7odule@ tradin%.

EII)

TRANSMISSION D NOMINATION 2ne of the lesser>known but widely e1perienced problems of

dealin% in securities is with re%ard to their transmission. The $ompanies ,ct distin%uishes *a#'+!''!"# of shares from *a#'1&* of shares. /hile transfer of share related to a voluntary act of the shareholder transmission is brou%ht abut by operation of law. The word 4transmission=- 7eans devolution of title to shares- for e1ample- devolution by death- succession- inheritance- bankruptcymarria%e etc.- the person on whom the shares devolve has to prove his entitlement by submittin% appropriate documents & seek transmission. f the securities are held in the depository system- documents have to be submitted to the D!. NOMINATIONS FACILITY The companies ?,mendment@- ,ct 1** has introduced provision for nomination in respect of shares- debentures- fi1ed deposits- etc. This facilities fulfills one of the lon%>felt needs of the investors. The facility was already in place for deposits in bankin% industry. Dnder the provisions- a shareholder- a debentures holder- a bond holder or a deposit>holder can nominate a person- in whom th shares or debentures or bond or deposits would vest in the event of ori%inal investors death . the facility can be availed of by any person whether ndian resident or a 5A investor.

EIII) DEMAT D REMAT DEMATERLIFATION 2ne of the methods for preventin% all the problems that occur with physical securities is throu%h dematerialization ?demat@ ndia has adopted the demat route in which the book entry is made electronically a%ainst securities that are cancelled. ,fter this process each security is identified in the depository system by 3 5 and short name. I# &*#a !"#a$ '&-0*! !&' !2&# !1!-a !"# #0+5&* EISIN) is uniBue for each security issued in any of the international standards or%anization EISO) member counties in accordance with the 3 5 standard EISO 8(88). ISIN !' a (2=-4a*a- &* $"#. !2&# !1!-a !"# +a*7. 01ample %ratia- a person owin% 1.. shares in S4a'4! L 2. n physical form will record his ownership as belowF $ompany 5ame 5o. of shares Distinctive 5os $ertificate 5o Holio 5o shown asF BAB ..1#,.1.13 SGA by demat 1... DEMATERIALIFATION PROCESS F F F F F S4a'4! Ctd. 1.. *32'"4(.. to *32'"4).. A,E ..12'3 ,'")"42

n 53DC depository system- the record of ownership will be

nvestor

D !

2,

"

R&T Agent
4

NSDL

STEPS 1. $lient#investor submits the DAH ?Demat AeBuest Horm@ and physical certificates to D!. D! checks whether the securities are available for Demat. $lient faces the certificate by stampin% 4surrendered for dematerialization=. D! punches two holes on the name of the company and draws two parallel lines across the face of the certificate. 2. D! enters the Demat reBuest in his system to be sent to 53DC. D! dispatches the physical certificates alon% with the DAH to the A&T ,%ent. 3. 4. ". 53DC records the details of the electronic reBuest in the system and forwards the reBuest to the A&T ,%ent. A&T ,%ent- on receivin% the physical documents and the electronic reBuest- verifies and checks them. 53DC credits the dematerialized securities to the beneficiary account of the investor and intimates the D! electronically. The D! issues a statement of transaction to the client. REMATERIALIFATION Aematerialization is the e1act *&9&*'& of the dematerialization. t refers to the process of issuin% physical securities in place of the securities held electronically in book>entry form with a depository. The re%istrar prints fresh candidates to the investor after confirmin% the reBuest with 53DC and to that e1tent the account balance of the investor with 53DC is reduced. REMATERIALIFATION PROCESS

NSDL
3

"

DP
1

4 REGISTRAR '
BENEFICIAL O>NER

STEPS 1. 2. 3. 4. ". 6eneficial owner reBuests for Aematerialization. Depository participant intimates 53DC of the reBuest throu%h the system. 53DC confirms Aematerialization reBuest to the re%istrar. Ae%istrar updaters accounts and downloads details to depository participant. Ae%istrar dispatches certificates to investor. 2ne of the basic service provided by 53DC is to facilitate transfer of securities from one account to another. 2n the instruction of the account holder. This can be done for any of the followin% purposesF ?a@ ?b@ ?c@ Transfer due to a transaction done on a person to person basis ?i.e. an off market trade@. Transfer assessin% out of a transaction done on a stock e1chan%e. Transfer arisin% out of transmission and account closures. O11 Ma*7& T*a2& EIV) TRADING D SETTLEMENT

NSDL

DP(

DP2

S&$$&*

B03&*

1. 2. 3. 4. ". '.

3eller %ives delivery instruction to his D! to move securities from his to the buyer&s account. 6uyer automatically receives the credit of the securities in to his account on the basis of standin% instruction of credits. 6uyer receives credit of securities into his account only if he %ives receipt instructions- if standin% instruction have not been %iven. D! needs to be e1tra careful in verifyin% the si%nature of the client if unusual Buantity of securities are bein% debited to the account. Hunds move from buyer to seller outside the 53DC system. 01ecution date should be same on both the instructions Delivery instruction of the seller and Aeceipt instruction of buyer@. ?i.e.

SETTLEMENT OF MARKET TRANSACTION Ma*7& S& $&+&# =D&+& S4a*&'

NSDL

DP 2

'
CC

DP

2 1 B*"7&*

3 B*"7&* 4

1 SELLER SELLER

4 BUYER BUYER

, market trade is one that is settled throu%h participation of a clearin% corporation. n the depository environment- the securities move throu%h account transfer. 2nce the trade is e1ecuted by the broker on the stock

e1chan%e- the seller %ives a delivery instructions to his D! to transfer securities to his broker&s account. The broker has to them completer the pay>in before the deadline prescribed by the stock e1chan%e. The broker moves the securities from his account to $$#$; of the stock e1chan%e concerned- before the deadline %iven by stock e1chan%e. The $$#;; %ives pay>out and securities are transfer to the buyin% broker&s account. The broker then %ives delivery instruction to his D! to transfer 3ecurities to buyer&s account. The movement of funds takes place outside the 53DC system. 1. 2. 3. 4. 3eller %ives delivery instructions to his D! to move securities from his account to his broker&s account. 3ecurities are transfer from broker&s account to $$ on the basis of a delivery out instruction. 2n pay>out- securities are moved from $$ to buyin% broker&s account. 6uyin% broker %ives instructions and securities move to the buyer&s account. STEPS IN PAY=IN AND PAY=OUT The process of a broker ?$7@ submittin% securities to $$#$; of a stock e1chan%e towards the securities purchased by him is called pay>in. ,ll $7s are e1pected to complete the pay>in before the deadline prescribed by the stock e1chan%e. n a depository environment- the followin% steps have to be completed to e1ecute the Jpay>in& successfully. The clients of the brokers who have deadline@. $7 will move securities from his account to $$#$E pf the stock e1chan%e concerned- before the deadline %iven by the stock e1chan%e. f the $7 is unable to %ive delivery with in the time- shorta%e is sold securities willmove the securities to the broker&s pool account before the deadline ?53DC

purchased by the $$#$; in an open auction and the difference in price is collected form the $7. SPECIAL SERVICES EI) PLEDGE D HYPOTHECATION The depository ,ct permits the creation of pled%e and hypothecation of securities. Hor this purpose both the parties to the a%reementi.e. the pled%e must have a beneficiary account with 53DC but it need with the same D!. The nature of control on the securities offered as collateral determines whether the transaction is a pled%e or hypothecation. f the lender ?pled%e@ has unilateral ri%ht ?without reference to borrower@ to appropriate to his account if the borrower ?pled%er@ defaults or otherwise the transaction is called a pled%e. t the lender need concurrence of the borrower ?pled%er@ for appropriatin% securities to his account- the transaction is called hypothecation. PLEDGE OF DEMAT SHARES

NSDL
2 3 PLEDGEEHS DP 4 2
CONFIRMATION

" PLEDGERHS DP

PLEDGEE

AGREEMENT

PLEDGER 1

LOAN
8

STEPS 1. 2. 3. 4. ". ,%reement is si%ned between the pled%er and pled%ee outside the 53DC system. !led%er %ives a creation reBuest to D! who enters it in the system. The reBuest the pled%ee&s D! throu%h the 53DC system. !led%ee is intimated by his D!. !led%ee %ives a pled%e creation confirmation to his D! who enters it in the system. 3ecurities are transferred from the Jfree balance& head to Jpled%ed balances& head '. Coad is %iven by pled%ee to pled%er outside the 53DC system. PLEDGE CLOSURE The pled%er can reBuest for closure of pled%e# hypothecation after the performance of the underlyin% a%reement.

NSDL
2 2 3 PLEDGEEHS DP 2 3
C"#1!*+a !"#

PLEDGERHS DP 2

PLEDGEE

PLEDGER

Pa3+&#

STEPS 1.

!led%er repays the loan to pled%e.

2. 3. 4.

!led%er %ives a pled%e closure reBuest to his D!. D! forwards the reBuest to pled%ee&s D! throu%h 53DC. !led%ee %ives a pled%e closure conformation from to D!. D! confirms the closure on the system. The pled%e is closed and the securities are moved from balances to free balances in the pled%er&s account. Jpled%ed&

PLEDGE INVOCATION f the pled%er fails to dischar%e his obli%ations under the a%reement of pled%e or for any other reason- the pled%ee may invoke the pled%e.

NSDL
3 2 PLEDGEEHS DP 2
I#9"-a !"# O*2&*

PLEDGERHS DP 4

PLEDGEE

PLEDGER

NOTICE

STEPS 1. 2. 3. 4. 2n repayment default- pled%ee sends an invocation notice to pled%er. !led%ee submits a pled%e invocation reBuest to D!. D! forwards the reBuest to pled%ee&s D! throu%h 53DC. !led%ee %ives a pled%e closure confirmation form to D!. D! confirms the closure on the system. The pled%e is closed and the securities are moved from Jpled%ed& balances to free balances in the pled%er&s account.

EII)

STOCK LENDING D BORRO>ING The transactions involvin% and borrowin% of securities are

e1ecuted throu%h approved intermediaries duly re%istered with 306 under the securities lendin% scheme 1**(. 3uch an intermediary may deal in the depository system only throu%h a special account ?known as intermediary account@ opened with a D!. n this re%ard the intermediary has also to obtain approval of 53DC. DEPOSIT OF SECURITIES FROM LENDER TO INTERMEDIARY

NSDL
4 ' ( ( PLEDGERHS DP
R&I0&'

PLEDGEEHS DP " (
A--&, a#-&

(
A.*&&+&# LENT

1
FREE

PLEDGEE

PLEDGER

STEPS 1. 2. 3. 4. ". '. (. Cender forwards reBuest to his D!. Cender&s D! electronically communicates reBuest to 53DC. The securities are blocked in lender&s account in favour of the intermediary. 53DC electronically inform intermediary&s D!. ntermediary forwards acceptance reBuest to his D!. ntermediary&s D! electronically communicates acceptance to 53DC. 3ecurities are moved lender&s account to intermediary&s account.

LENDING OF SECURITIES BY INTERMEDIARY TO BORRO>ER

NSDL
2 '
BORRO>ERHS DP

"
INTERMEDIARYHS DP

1
R&I0&'

'
A.*&&+&#

'

4
A--&, a#-&

BORRO>ER

PLEDGER

STEPS 1. 2. 3. 4. ". '. 6orrower forwards reBuest to his D!. 6orrower&s D! electronically communicates reBuest to 53DC. 53DC electronically informs intermediary&s D!. ntermediary forwards acceptance reBuest to his D!. intermediary&s D! electronically communicates acceptance to 53DC. 3ecurities are moved from intermediary account to borrower&s account. 6enefits acBuirin% to shareholders in the nature of dividendsbonds- etc.- are %enerally referred to as corporate actions in the conte1t of depository operations. $orporate actions are the events which affect the ri%htsobli%ations and#or interest of the beneficial owners of the securities held in a depository. The e1amples which are most common are- payment of interestdividend- bonus- shares ri%hts- mer%er- redemption of call>money- liBuidationetc. EIV) PUBLIC ISSUES The primary market is the primary source of savin%s i.e.investors. The issue of securities in the primary market can be made by a new company- a new company promoted by an e1istin% company- an e1istin% public

EIII) CORPORATE ACTIONS

listed company- or an e1istin% public unlisted company. ,ccordin% to the companies ,ct ES&- !"# 8<B) every listed public company- makin% an initial offer of As. 1. $rore and above has issue at only in dematerialized form. EV) DEBI INSTRUMENTS D GOVERNMENTS SECURITIES n order to %et properly about this topic we need to break it in two parts such as followsF E!) DEBT INSTRUMENTS The interest bearin%s securities are called debt instruments. Dependin% on their features like issuer- interest rate- issue etc. debt instruments can be classified into different cate%ories like bonds- debentures- commercial paper- %overnment securities- treasury bills- etc. These are further classified broadly into subordinate bonds- floatin% sate bond#debenture- deep discount bond- secured#unsecured debentures- zero coupons bonds- variable coupons rate bond- etc. while financial institutions or corporate bodies issue bondsdebentures and commercial paper- %overnment securities and treasures bill are issued by %overnment state or central. GOVERNMENT SECURITIES , security created and issued by the central %overnment or a state %overnment for the purpose of raisin% a public loan- discloses the meanin% of %overnment security. There are two types of %overnment securities>Dated securities and treasures 6ills. Dated securities have a maturity period of more than one year. Treasury bills have a maturity period of up to one year. ,ll the activities relatin% to issue of %overnment securities ?<30$s@>issue mana%ement- settlement of trade- distribution of interest and redemption are handled by the A6 throu%h its !D2 ?public Debt 2ffice@ althou%h only corporate and institutional investors also permitted to subscribe to these securities. ,n investors in %overnment securities has the option to have securities issued either in physical form of in book. 0ntry form ?commonly known as 3<C form@.

CDSL=A BRIEF STUDY

INTRODUCTION The bank for international settlements defines the functions of a depository as underF 4, facility for holdin% security which enables securities transactions to be processed by book entry. The depository may immobilize physical securities or securities may be dematerialized i.e. so that they e1ist only as electronic records.= The depository ,ct- 1**' introduced a multi>depository framework for scripless settlement. This le%islation ushered in ann era of efficient market infrastructure- improved investor protection- reduced risks and transactions in the securities market. t has provided an effective answer to problems arisin% from for%ed#fake- counterfeit certificates bad delivers etc. which have bedeviled the paper based market. The market perception is that multiple depositories- as enshrined in the ,ct- will accelerate the pace to shift to scripless settlement. $ompetition will stimulate innovation and ensure that depository system in the country is responsive to users& reBuirements and concern. $D3C is set up to meet the ob+ectives of the ,ct and to fulfill the user&s needs. $Ds secured as its 4 commencement certificate= on F&5*0a*3 ;B (<<< from 306 . OBJECTIVES The ob+ectives of $D3C are like wise to the ob+ectives of 53DC. 6ut still the ob+ectives of $D3C are described further which are havin% much importance. To accelerate scriptless tradin%. To create a competitive environment- which will be responsive to user&s interests and concern. To make a ma+or thrust in the individual investor&s participation in the

depository system. MANAGEMENT , professional 6oard of directors with vast and varied e1perience is capital markets and bankin%- is at the helm of affairs at $D3C. The depository- $D3C is situated at 4!heroze Eee+eebhoy Towers- 23 rd Hloor- Dalal street- 7umbai>23=. PROMOTERS $D3C is promoter by the stock e1chan%e- 7umbai ?630@- in association with 6ank of ndia- 6ank of 6aroda ;DH$ 6ank and 3tate 6ank of ndia. TECHNOLOGY $D3C has desi%ned systems that ensure user friendliness. n doin% this- $D3C has also ensured hi%h de%ree of safety and confidentiality for the users. HARD>ARE The hardware is provided by ;ewlett !ackard provides the hardware. HP <))) V 22)) E84 B! ) 0nterprise server system ?super computer technolo%y with the robustness of enterprise class@- is the hi%hest performin% A 3$#D5 : server system available in the marketplace. This system is connected to a near fault tolerant stora%e system from EMC 2 corporation featurin% multiple A, D levels and intelli%ent dia%nostics ?automatic disk fault findin% system@. This is the best stora%e systems of the world and the first of its kind to be installed in ndia. The load handlin% capacity of D5 : systems is virtually limitless. SOFT>ARE The software is developed and supported by $7$ ltd. who has also developed the 6olt system for 630. The software is modified version of the bankin% software OTC 4 developed by $7$ ltd. /hich is currently bein% used by several banks worldwide. The software has been customized to suit the

reBuirement of $D3C. DATA BASE ARCHITECTURE $D3C has decided to %o in for a centralized database system. This centralized architecture provides the followin% distinct advanta%es to the usesF The initial set up cost for companies. Their AT,s and D!s is low. nformation on investor&s holdin% is available to the depository participants and the company or its re%istrars and transfer ?A&T@ a%entsimmediately. SYSTEMS SAFETY AND CONTINGENCY PLANS The security of the hardware system conforms to the hi%hest level as defined by the D3 department of Defence. The software has all the security features confirmin% to international standards- and facilitates a robust accountin% and transactions mana%ement system. $D3C ensure the security and security and inte%rity of all data by protectin% it form any misuse or manipulation by unauthorized users there by safe %uardin% the interests of all users. ,ll communications between $D3C and its users are encrypted. There is an auto mirrorin% of data on a continuous basis on the FMC2 stora%e system at the $D3C main site. 6ack up on Di%ital liner Tapes ?DCTs@ is taken on a daily basis. These DCTs are stored at a remote site under safe conditions. There is a disaster recovery site with identical hardware as at the main site. Data is updated at this disaster recovery site simultaneously. $D3C is sub+ect to a ri%orous audit procedure by its internal and independent e1ternal auditors. $3DC falls under the re%ulatory preview of the securities and e1chan%e 6oard of ndia ?306 @.

INTER=DEPOSITORY CONNECTIVITY ,n>a%reement between the depositories on inters>connectivity has been si%ned. This will facilitate settlement and movement of assets and custody form one depository to another.

CONCLUSION
t is concluded from the study that today&s investors are more conscious abut selection of depository participant. They do not spend their money by free hand but they see the returns in lieu of investin% money- if it is satisfactory- they %o for investment otherwise not. 6efore %oin% to invest money to %et account opened in any D!- of it & then reached to appropriate & final decision. ,fter the study- it came to know the various facts as %iven belowF 1. 2. 3. 7any of the clients of depository participants are willin% & crucial to %et their physical scrips dematerialized. t is proved the dematerialization as a most beneficial system- because if this system is accepted it would reduce many risks & produce safety. The different of char%es & fees of the depository 53DC & $3DC is minor but the services provided by them are different in many re%ards so demand of both isn&t same. 4. The investors- who have %ot their account opened in C30 D!- perceive

& feel that they&re under a %reat safety. t shows that the C30 D! is providin% satisfactory services. Aespondents supported me & helped me to conclude that investors # clients attitude is very much favorable towards C30 D! & the depository 53DC.

BIBLIOGRAPHY
EBOOKS) 1. 2. Kothari C.R., R&'&a*-4 M& 4"2"$".3B Vishwa Prakashan, ew !elhi. Khan M.Y. & Jain P.K., F!#a#-!a$ Ma#a.&+&# B Tata "c#$raw %ill Publishing company &imited, ew !elhi. EMAGAFINES D NE> PAPERS) 3. 4. !. 8. :. ;. <. (). ((. (2. (3. DP Directory, Printed by "s Printography, "umbai. LSE Bu etin,. LSE Pro"i e. LSE Annua Re#ort, $an% &oo' "or (SDL De#o)itorie) o#eration) Mo%u e= (B2B3 D 4. The Econo*ic) Ti*e), Bu)ine)) )tan%ar%, CCC.5'&!#2!a.com CCC.-&# *a$2&,"'! !"*3.com CCC.!#1"J#'2$.co.in CCC.#'&!#2!a.com CCC.#'2$.-".in

ESITES)

KUESTIONNAIRE FOR DEPOSITORY

PARTICIPANTHS CLIENTS 5ameF XXXXXXXXXXXXXXXXXXXXXXXXX 2ccupationF XXXXXXXXXXXXXXXXXXXXX ncomeF XXXXXXXXXXXXXXXXXXXXXXXX 1. 2. Hor how lon%- you are transactin% on stock e1chan%eK XXXXXX /hat type of transactions you do on stock e1chan%es ?please tick the appropriate@. > > > 3. 3peculative nvestment both XXXXXXXXXXXXXX XXXXXXXXXXXXXX XXXXXXXXXXXXXX

/hat is the purpose of your transactin% on stock e1chan%e ?please tick the appropriate@K > > > > 7akin% short term %ains 7akin% lon% term %ains Ae%ular income ,ll XXXXXXXXXXXXXX XXXXXXXXXXXXXX XXXXXXXXXXXXXX XXXXXXXXXXXXXX ?8es # no@

4. ".

,re you aware of Demat 3ystemK

Do you think that Demat 3ystem is beneficial to youK ?8es# no@

'.

/hat is the most important benefit- you think of DematK

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (. 3ometimes do you have the view that to save time in %ettin% your securities dematerialized you are forced to sell it in physical form at a lossK ). be done withK *. 1.. Do you have any Demat accountK ?8es # no@ ?8es # no@ Do you think that securities- which aren&t dematerialized- should also

5ame the depository participant with whom you have your Demat account. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

11.

;ow much money you have to spend initially to open your Demat accountK XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

12.

;ow much money you have to spend annually for the maintenance of your Demat accountK XXXXXXXXXXXXXXXXXXXX

13.

/hat are your views about the money char%ed by your Depository participantK > > > 01cessive nsufficient ,deBuate

14.

;ad your decision of openin% a Demat account was influenced by money char%ed by various Depository participantsK ?8es # no@

1".

2n an avera%e- how much time is your Depository participant to credit the security in electronic form to your accountK

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 1'. Do you think that time taken by your Depository participants to credit the security in electronic form to your account is more than claimed themK 1(. ?8es #no@

,re you satisfied with services provided to you by your Depository participantK

1).

,re you aware of initiation of pro+ect of Depository participant of Cudhiana 3tock 01chan%eK ?8es # no@

1*.

6ein% %iven an opportunity- where will you like to open a new Demat accountK > > > /ith same old Depository participant. Depository participant of Cudhiana 3tock 01chan%e. ,ny other.

2..

/ill you feel more secured by openin% you Demat account at Cudhiana 3tock 01chan%e Depository participantK ?8es # no@

QQQQQQQQQQQQQQQQQQQQQ

ABBREVIATIONS
ADFFS AMC ASTS B"D CM CSDL CDS DPM DRFAN DLT DCA DP EFT E"D ECS EDP FMC FRA FIMMDA GTS ISIN IFSD IPF MCFS MTML MEP MRTPC NSDL NASK OTCEI RRNAF R DT SEBI SGF V=SAT > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > > ,utomatic Disk Hault Hindin% 3ystem ,nnual 7aintainin% $har%e ,dministrative 3hare Transfer &

3teerin%

$ommittee 6e%innin% of day processin% $learin% member $entral Depository 3ecurity Cimited $entral Depository 3ervice Depository !articipants 7odule Dematerialization reBuest Horm # 5umber Di%ital Cinear Tape Department of $ompany ,ffairs Depository participant 0lectronic Hunds Transfer 0nd of Day 0lectronic Hunds Transfer 0lectronic Data !rocessin% Horward 7arket $ommission Hiscal Aesponsibility ,ct Hi1ed ncome & 7oney 7arket Derivatives ,ssociation <lobal Transaction 3ervices nternational security identification 5umber nterest Hree 3ecurity Deposit nvestor !rotection fund 7odified $arry Horward 3ystems 7ark>To>7arket Coss 7aster 0Buity !lan 7onopolies & Aestrictive Trade !ractices commission 5ational 3ecurity Depository Cimited 5ational ,ssociation of securities for ,utomated Nuotations 5on>6ankin% Hinance of ndia Aematerizlizaiton AeBuest 5umber # Horm Ae%istrar & Transfer 3ecurity & 01chan%e 6oard of ndia 3ettlement <uarantee Hund Gery 3mall ,perture Terminal

YTM

>

8ield to 7aturity

ACKNO>LEDGEMENT
'he success of preparing this report possible by contribution of umerous indi(iduals towards it. It would be greatest pleasure form to express my intellectual debt of gratitude to the contribution of such indi(iduals. I would like thanks to Mr). Ra*nee' Kaur +Training $ea%, for permit me to take the training at )&udhiana stock exchange *ssociation &td.

NEHA MAHAJAN

CONTENTS
$hapter#Topic 2b+ective of the study !,AT S, 1. 2. !,AT>6 3. 4. ". '. (. ). *. 1.. 11. 12. 13. 14. 1". 1'. Depository system Ce%al Hrame work $ommencement of 6usiness ,dmission of !articipants Depository in ndia Hees- Deposits & $har%es 53DC>, !rofile 3ervice standards 53DC 3ervices $D3C S, 6rief study Hindin%s $onclusion 6iblio%raphy ,nne1ures ntroduction of stock e1chan%e ,bout Cudhiana stock e1chan%e

PREFACE
0fficient 7ana%ement of 7aterial- time and Hinancial resources is very important for the accomplishment of any ob+ective. 9eepin% all this in view this !resent report of JOPERATIONAL ASPECTS OF DEPOSITORYH is prepared by me. ,n attempt has been made in this report to !rovide reBuisite theoretical frame work for the understandin% of the !ractical !roblem of Cudhiana stock e1chan%e & Depository. The !resent report consist of two !arts , and 6. n !art J,& nvolved ntroduction of 3tock e1chan%e and ,bout Cudhiana stock e1chan%e. n !art J6& involved Depository system- le%al frame work- $ommencement of 6usiness- ,dmission of participants- fees deposits and char%es of 53DC and $D3C- 53DC and $D3C profile- ,nne1ure. n this report have done my best so that any body who has no look forward su%%estions

prior knowled%e of elements of C30 & D! can under stand properly without any difficulty. f any mistake in this report then from all readers. E#2 "1 J0$3 2))4 V!#"2 S4a*+a

ANNEXURES

A S0++&* T*a!#!#. P*"G&- R&,"*

"# OPERATIONAL ASPECTS OF DEPOSITORY

Su&*itte% &y-

NEHA MAHAJAN Roll No.42449047

BBA Student of Guru Nanak Institute of Mana e!ent " #e$%nolo & 'ud%iana ( Affiliated fro! )#*+ Jalland%ar , (Session - 2004.2007 ,