NISM Series 7 Securities Operations & Risk Management | NISM VII Course | NISM SORM Course - Depository System Concepts | NSDL & CDSL

Multi Depository system - NSDL & CDSL Dematerialisation Fungibility Registered Owner Beneficial Owner Free Transferability of Shares Multi-Depository System: The Depositories Act, 1996 provides for a multi-depository system. There can be various entities providing depository services. Dematerialisation: The model adopted in India provides only for dematerialisation of securities. This was a significant step towards achieving a completely paper-free securities market. Dematerialisation of securities occurs when securities issued in physical form are destroyed and an equivalent number of securities are credited into the security holder(s) beneficial owner's account. India has adopted dematerialisation route through a depository. In a depository system, the investors stand to gain by way of an efficient settlement, lower costs and lower risks of theft or forgery, etc. But the implementation of the system has to be secure and well governed. All the players have to be conversant with the rules and regulations as well as with the technology for processing. The intermediaries in this system have to play strictly by the rules. Depository services through depository participants: The Depositories Act, 1996 provides that the depositories provide their services to the security holder(s) through their agents called Depository Participants (DPs). The appointment of DPs is subject to the conditions prescribed under SEBI (Depositories and Participants) Regulations, 2018 and other applicable conditions. Fungibility: In the depository system, the securities in dematerialised form are not identified by distinctive numbers and certificate numbers as in the physical environment. Thus all securities in the same class are identical with each other and are interchangeable. For example, all equity shares in the class of fully paid up shares are interchangeable. Registered Owner/ Beneficial Owner: In the depository system, the ownership of securities dematerialised is vested in the security holder. The depository is recorded in the books of the issuer as a Registered Owner and in the records of the depository the security holder is recorded as the Beneficial Owner. However, the ownership rights and liabilities rests with the Beneficial Owner. All the rights, duties and liabilities underlying the security belong to the beneficial owner. Free Transferability of shares: Transfer of shares held in dematerialised form takes place freely through an electronic book-entry system. NISM Mock Tests - https://modelexam.in/nism-exams/nism-mock-test.html NISM Study Material - https://modelexam.in/nism-exams/nism-study-material.html NISM 7 SORM Exam Preparation - https://modelexam.in/nism-exams/nism-series-7-sorm.html NISM 6 DOCE Exam Preparation - https://modelexam.in/nism-exams/DOCE.html Financial Planning Mock Tests - https://modelexam.in/financial-planning/fp-mock-test.html IIBF, JAIIB & CAIIB Mock Tests - https://modelexam.in/iibf-exams/iibf-mock-test.html #depository #nsdl #cdsl #demataccount #demat #nism #nismexam #nismexampreparation #nismexams #nismclasses #nismdoce #nism6 #depositoryexam #fungibility