Dematerialisation
Dematerialisation is a revolutionary concept which has been brought to India after a long time. Earlier the stocks were bought or sold in physical paper certificates an done had to send these shares to the company registar for transfer in an individual name. However the same became History with the concept of dematerialization. In the below writeup you will find ample information to make you a stock market expert.
Demat Process
Dematerialisation in short is called as 'demat is the process by which an investor can get physical certificates converted into electronic form maintained in an account with the Depository Participant. The investors can dematerialize only those share certificates that are already registered in their name and belong to the list of securities admitted for dematerialization at the depositories.
Depository
The organization responsible to maintain investor's securities in the electronic form is called the depository. In other words, a depository can therefore be conceived of as a "Bank" for securities. In India there are two such organizations viz. NSDL and CDSL. The depository concept is similar to the Banking system with the exception that banks handle funds whereas a depository handles securities of the investors. An investor wishing to utilize the services offered by a depository has to open an account with the depository through a Depository Participant.
Depository Participant
The market intermediary through whom the depository services can be availed by the investors is called a Depository Participant (DP). As per SEBI regulations, DP could be organizations involved in the business of providing financial services like banks, brokers, custodians and financial institutions. This system of using the existing distribution channel (mainly constituting DPs) helps the depository to reach a wide cross section of investors spread across a large geographical area at a minimum cost. The admission of the DPs involve a detailed evaluation by the depository of their capability to meet with the strict service standards and a further evaluation and approval from SEBI. Realizing the potential, all the custodians in India and a number of banks, financial institutions and major brokers have already joined as DPs to provide services in a number of cities.
Conclusion
The stock market trading has been amply simplified and one must make use of the available opportunity to make money in the market and same can be made by either intraday trading or by virtue of the holding of stocks. Since dematerialization has changed the way we hold stocks and thus one must trade in market to take benefit from the revolution which is existing in the present times. Happy Investing !
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