Role And Functions Of Depositories In Securities Market

Mithelesh DK

BA0130038

Introduction:

Securities market is an economic institute within which take place sale and purchase
transactions of securities between subjects of economy on the base of demand and supply.
Also we can say that securities market is a system of interconnection between all participants
(professional and nonprofessional) that provides effective conditions: to buy and sell
securities, and also

To attract new capital by means of issuance new security (securitization of debt),

To transfer real asset into financial asset,

To invest money for short or long term periods with the aim of deriving profit.

India has adopted the Depository System for securities trading in which book entry is done
electronically and no paper is involved. The physical form of securities is extinguished and
shares or securities are held in an electronic form. Before the introduction of the depository
system through the Depository Act, 1996, the process of sale, purchase and transfer of
securities was a huge problem, and there was no safety at all. The depository system
envisages a deposit of securities by the various investors with the depository. This would take
the form of a transfer by the various investors with the depository. This would take the form
of a transfer by the holder of securities in favour of depository. Once the shares are lodged
with the depository, their transfer would be through book entry transfers in accounts
maintained by the depository. Thus the main functions of a depository are to dematerialize the
securities and enable their transaction in book entry form.

Statement of problem:
The need for depository system was also realised for the healthy growth of primary market,
which would reduce the time between the allotment of shares and transfer of entitlements
arising out of each allotment. As India has a large number of listed company involving a
massive amount of paper work, there have been stolen share., forged/fake certificates, etc.,
which pose a threat to the security of investment.

Scope, objectives and significance:

The researcher focuses on the relevant regulations that are governing the role played the
Depositories in primary market. The researcher would also study in the depth registration of
depository and its key role in building up the primary market for securities in India.

Research Questions:

1. Whether issue Demat account comes under the structure of corporate finance or does
it need any revival?
2. Whether the ownership of securities dematerialized is bifurcated between Registered
Owner and Beneficial Owner?

Conclusion:

Dematerialization of shares is a major change in Indian securitires markets and it has

wide ramifications on various sectors of the market in order to understand and
appreciate the implications there is a need to make a in depth study of the impact the
DeMat generated on market structure of Indian Stock Exchange