The trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. This imposed limits on trading volumes and efficiency. In order to provide efficiency, liquidity and transparency, NSE introduced a nation-wide on-line fully automated screen based trading system where a member can punch into the computer quantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching sale or buy order from a counter party. Screen based electronic system electronically matches orders on a strict price/time priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It allows faster incorporation of price sensitive information into prevailing prices, thus increasing the informational efficiency of markets.
It enables market participants, irrespective of their geographical locations, to trade with one another simultaneous, improving the depth and liquidity of the market. It provides full anonymity by accepting orders, big or small, from members without revealing their identity, thus providing equal access to everybody. It also provides a perfect audit trial, which helps to resolve disputes by logging in the trade execution process entirety. The sucked liquidity from other exchanges and in the very first year of its operation, NSE became the leading stock exchange in the country, impacting the fortunes of other exchanges and forcing them to adopt SBTS also.
Today India can boast that almost 100% trading take place through electronic order matching. In order to promote dematerialization of securities, NSE joined hands with leading financial institutions to establish the national securities depository Ltd. (NSDL), the first depository in the country, with the objective of enhancing the efficiency in settlement systems as also to reduce the menace of fake/forged and stolen securities. This has ushered in an era of dematerialised trading and settlement. SEBI has made dematerialised settlement mandatory in an ever -increasing number of securities in a phased manner, thus bringing about an increase in the proportion of shares delivered in dematerialised form. There is an increasing preference to settle trades, particularly in high value securities, in demat form. Such high level of demat settlement reassures success of rolling settlement. What is DEMAT
In India , a demat account, the abbreviation for dematerialised account, is a type of banking account which dematerializes paper-based physical stock shares. Conversion of Securities from Physical (Paper) Mode into Electronic Mode is Called Dematerialisation. The Client opens Demat Account with any DP. Upon Demat, the Certificates are destroyed and credit entry of exactly equal number of Securities is created in Depository in Electronic mode. The B.O. account of holder is credited and the securities loose their identities. The dematerialised account is used to avoid holding physical shares: the shares are bought and sold through a stock broker. This account is popular in India.
The market regulator, securities and exchange board of India (SEBI) mandates a demat account for share trading above 500 shares. As of April 2006, it became mandatory that any person holding a demat account should possess a permanent account number (PAN), and the deadline for submission of PAN details to the depository lapsed on January 2007. Dematerialisation is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited in the investor’s account with its DP. In order to dematerialize certificates; an investor will have to first open an account with a DP and then request for the dematerialisation of certificates by filling up a dematerialisation request form [DRF], which is available with the DP and submitting the same along with the physical certificates. The investor has to ensure that before the certificates are handed over to the DP for demat, they are defaced by marking “Surrendered for Dematerialisation” on the face of the certificates. Objective of the Study
• The main objective of the study is to know about the potential of the market regarding people’s dealing in share market. • To know the role of Demat Account .
• To know the procedure of opening DEMAT ACCOUNT.
• The objective is to know that how many people in the city are aware of the UNICON SECURITIES PVT. LTD. • To know where people have already opened their demat a/c and on what basis. Procedure for Opening an Account
A demat account are opened on the same lines as that of a Bank Account. Prescribed Account opening forms are available with the DP, needs to be filled in. Standard Agreements are to be signed by the Client and the DP, which details the rights and obligations of both parties • The DP officials will make available the relevant account opening form (depending on whether the client is a retail investor or corporate client/clearing member) and specify the list of documents regarding references that should be submitted along with the form. It will also give a copy of the relevant agreement to be entered with the client, in duplicate. • The client will submit the duly filled in account opening form and client has to visit personally for opening the account in DP. The DP officials have to do in person verification and affix the “IN PERSON VERIFICATION” stamp on the account opening form. It should also furnish such documents regarding references, as specified by the DP, along with the account opening form. After executing the agreement the client has to forward it to the DP. • The DP officials will verify that the account opening form is duly filled in. It will also verify the enclosed documents, if any. Incomplete forms will be forwarded to the client for rectification.
For Corporate Clients, the DP officials will verify if the board resolution for the authorized signatories is enclosed. • In case the documents are not proper, the DP officials will reject the form and intimate the client of the same, stating the reasons for doing so. • If the form is in order; the DP officials will accept the same and affix the stamp “verified with original” on each and every proof after seeing the original proofs. • After completion of all documentation, the DP officials will verify the pan from income tax website. And affix the stamp “PAN VERIFIED” with date and sign on the stamp. • The DP officials will enter the client details as mentioned in the account opening form in the DPM (software provided by NSDL & CDSL to the Participant) screen provided for the purpose.
In case of NSDL A/c opening the SR. Assist will capture all the details in the DPM and record the client’s signature (on the form) as specimen for authorizations in the future. • After entering client details in the system, a client account number will be generated by the DPM. The DP officials will enter this in the account opening form. After that the officers will verify the details in the DPM captured by the SR. Assist. and activate the account. • The DP officials are not allowed to give the demat a/c no to the clients until the a/c is activate, this is applicable for both NSDL & CDSL. • When the demat a/c is activated the DP officials have to send the client master and the copy of agreement between DP and client at the client’s address DEMAT Process
• The registered holder of the securities makes the request. • Securities must be recognised by Depository as eligible. • Client submits DRF & physical certificates to DP. DP checks securities. • Client defaces certificates and DP punches two holes on name of company. • DP enters demat request in system for Depository.
• DP dispatches certificates along with DRF to R&T.
• Depository records the details and sends to R&T.
• R&T agent verifies the details and confirms to Depository. • Depository credits the demat securities to BO a/c of client and intimates DP electronically. • DP issues statement to client