CHAPTER: 1 1.

1 INTRODUCTION TO FINACIAL MARKETS IN INDIA WITH DEFINITION:

A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods. There are both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded). Markets work by placing many interested buyers and sellers, including households, firms, and government agencies, in one "place", thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy. In finance, financial markets facilitate:

The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) Price discovery Global transactions with integration of financial markets The transfer of liquidity (in the money markets) International trade (in the currency markets)

DEFINITION
In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them. The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (like the NYSE, BSE and NSE) or an electronic system (like NASDAQ). Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange. Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a stock exchange, and people are building electronic systems for these as well, similar to stock exchanges. Financial markets can be domestic or they can be international. Therefore we can conclude saying it is any market place where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives.

1.2 TYPES OF FINANCIAL MARKETS

Within the financial sector, the term "financial markets" is often used to refer just to the markets that are used to raise finance: for long term finance, the Capital markets; for short term finance, the Money markets. Money markets and capital markets are parts of financial markets. The instruments bear differing maturities, currencies, credit risks, and structure. Therefore they may be used to distribute the exposure.

FINANCIAL MARKETS

Capital market
I. CAPITAL MARKETS

Money market

A capital market is a market for financial assets which have a long or indefinite maturity. Generally it deals with long term securities which have a maturity period of above one year. Capital market may be further divided into: (a) Industrial securities market (b) Govt. securities market and (c) Long term loans market.

So capital markets are financial markets for the buying and selling of longterm debt- or equity-backed securities. These markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Thus capital market generally deals in medium and long-term funds. Companies and governments use capital markets to raise funds for their operations; for example, a company may issue an IPO while a government may issue a bond in order to conduct new or expand

ongoing activities. Investors purchase securities in the capital markets in order to extract a return and earn profit on the securities. The market where securities are traded known as Securities market. It consists of two different segments namely primary and secondary market.

1. Primary market : The primary market deals with new or fresh issue of securities and is, therefore, also known as new issue market. In primary markets, new stock or bond issues are sold to investors, often via a mechanism known as underwriting. The main entities seeking to raise long-term funds on the primary capital markets are governments (which may be municipal, local or national) and business enterprises (companies). Governments tend to issue only bonds, whereas companies often issue either equity or bonds. The main entities purchasing the bonds or stock include pension funds, hedge funds, sovereign wealth funds, and less commonly wealthy individuals and investment banks trading on their own behalf.

2. Secondary markets : In the secondary markets, existing securities are sold and bought among investors or traders, usually on an exchange, over-the-counter, or elsewhere. The existence of secondary markets increases the willingness of investors in primary markets, as they know they are likely to be able to swiftly cash out their investments if the need arises The secondary market can also be further divided as: a) Spot market: The spot market where securities are traded for immediate delivery and payment. b) Forward market: The forward market is a market where the securities are traded for future delivery and payment. This forward market is further divided into Futures and Options Market.

II.

MONEY MARKETS

Money market is a market for dealing with financial assets and securities which have a maturity period of up to one year. In other words, its a market for purely short term funds. Generally money market does not deal in cash or money as such but simply provides a market for credit instruments such as bills of exchange, promissory notes, commercial paper, treasury bills, etc. These instruments help the business units, other organizations and the Government to borrow the funds to meet their short-term requirement. Most of the money market transactions are taken place on telephone, fax or Internet. As money became a commodity, the money market became a component of the financial markets for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less. Trading in the money markets is done over the counter and is wholesale. Various instruments exist, such as Treasury bills, commercial

paper, bankers' acceptances, deposits, certificates of deposit, bills of exchange, repurchase agreements, federal funds, and short-

lived mortgage-, and asset-backed securities. It provides liquidity funding for the global financial system.

1.3 DIFFERENCE BETWEEN MONEY MARKET AND CAPITAL MARKET:

Money market is distinguished from capital market on the basis of the maturity period, credit instruments and the institutions: 1. Maturity Period: The money market deals in the lending and borrowing of short-term finance (i.e., for one year or less), while the capital market deals in the lending and borrowing of long-term finance (i.e., for more than one year). 2. Credit Instruments: The main credit instruments of the money market are call money, collateral loans, acceptances, bills of exchange. On the other hand, the main instruments used in the capital market are stocks, shares, debentures, bonds, securities of the government. 3. Nature of Credit Instruments: The credit instruments dealt with in the capital market are more heterogeneous than those in money market. Some homogeneity of credit instruments is needed for the operation of financial markets. Too much diversity creates problems for the investors.

4. Institutions: Important institutions operating in the' money market are central banks, commercial banks, acceptance houses, nonbank financial institutions, bill brokers, etc. Important institutions of the capital market are stock exchanges, commercial banks and nonbank institutions, such as insurance companies, mortgage banks, building societies, etc. 5. Purpose of Loan: The money market meets the short-term credit needs of business; it provides working capital to the industrialists. The capital market, on the other hand, caters the long-term credit needs of the industrialists and provides fixed capital to buy land, machinery, etc. 6. Risk: The degree of risk is small in the money market. The risk is much greater in capital market. The maturity of one year or less gives little time for a default to occur, so the risk is minimized. Risk varies both in degree and nature throughout the capital market. 7. Basic Role: The basic role of money market is that of liquidity adjustment. The basic role of capital market is that of putting capital to work, preferably to longterm, secure and productive employment.

8. Relation with Central Bank: The money market is closely and directly linked with central bank of the country. The capital market feels central bank's influence, but mainly indirectly and through the money market. 9. Market Regulation: In the money market, commercial banks are closely regulated. In the capital market, the institutions are not much regulated.

1.4 ROLE OF FINANCIAL MARKETS

One of the important requisite for the accelerated development of an economy is the existence of a dynamic financial market. A financial market helps the economy in the following manner.

Saving mobilization: Obtaining funds from the savers or surplus units such as household individuals, business firms, public sector units, central government, state governments etc. is an important role played by financial markets.

Investment: Financial markets play a crucial role in arranging to invest funds thus collected in those units which are in need of the same.

National Growth: An important role played by financial market is that, they contributed to a nations growth by ensuring unfettered flow of surplus funds to deficit units. Flow of funds for productive purposes is also made possible.

Entrepreneurship growth: Financial market contributes to the development of the entrepreneurial claw by making available the necessary financial resources.

Industrial development: The different components of financial markets help an accelerated growth of industrial and economic development of a country, thus contributing to raising the standard of living and the society of well-being.

1.5 FUNCTIONS OF FINANACIAL MARKETS Intermediary Functions:

The intermediary functions of financial markets include the following:

Transfer of Resources: Financial markets facilitate the transfer of real economic resources from lenders to ultimate borrowers.

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Enhancing income: Financial markets allow lenders to earn interest or dividend on their surplus invisible funds, thus contributing to the enhancement of the individual and the national income.

Productive usage: Financial markets allow for the productive use of the fund borrowed, enhancing the income and the gross national production.

Capital Formation: Financial markets provide a channel through which new savings flow to aid capital formation of a country.

Price determination: Financial markets allow for the determination of price of the traded financial assets through the interaction of buyers and sellers. They provide a sign for the allocation of funds in the economy based on the demand and supply through the mechanism called price discovery process.

Sale Mechanism: Financial markets provide a mechanism for selling of a financial asset by an investor so as to offer the benefit of marketability and liquidity of such assets.

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Information: The activities of the participants in the financial market results in the generation and dissemination of information to the various segments of the market so as to reduce the cost of transaction of financial assets

Financial Functions

Providing the borrower with funds so as to enable them to carry out their investment plans.

Providing the lenders with earning assets so as to enable them to earn wealth by deploying the assets in production debentures.

Providing liquidity in the market so as to facilitate trading of funds.

it provides liquidity to commercial bank it facilitate credit creation it promotes savings it promotes investment it facilitates balance economic growth it improves trading floors

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CHAPTER: 2 2.1 THE DEPOSITORY ACT

The Depositories Act, 1996, ushered in an era of efficient capital market infrastructure, improved investor protection, reduced risks and increased transparency of transactions in the securities market. It also immensely benefited the issuer companies, in terms of reduced costs and the efforte x p e n d e d i n ma n a g i n g t h e i r s h a r e h o l d e r p o p u la c e . P e r h a p s , n o o t h e r single Act other than Depositories Act has had such profound all round i mp a c t o n e v e r y s i n g l e s t a k e h o l d er i n t h e I n d i a n c a p i t a l ma r k e t s . Th i s legislation envisaged multiple depositories in India to ensure benefits of competition for the users of the depository system

2.2 MEANING OF DEPOSITORY PARTICIPANT

In India, a Depository Participant (DP) is described as an agent of the depository. They are the intermediaries between the depository and the investors. The relationship between the DPs and the depository is governed by an agreement made between the two under the Depositories Act. In a strictly legal sense, a DP is an entity who is registered as such with SEBI under the sub section 1A of Section 12 of the SEBI Act. As per the provisions of this Act, a DP can offer depository-related services only after obtaining a certificate of registration from SEBI.

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SEBI (D&P) Regulations, 1996 prescribe a minimum net worth of Rs. 50 lakh for stockbrokers, R&T agents and non-banking finance companies (NBFC), for granting them a certificate of registration to act as DPs. If a stockbroker seeks to act as a DP in more than one depository, he should comply with the specified net worth criterion separately for each such depository. No minimum net worth criterion has been prescribed for other categories of DPs; however, depositories can fix a higher net worth criterion for their DPs.

2.3 DEPOSITORY SYSTEM

A depository is an organization which holds securities (like shares, debentures, bonds, government securities, mutual fund units etc.) of investors in electronic form at the request of the investors through a registered Depository Participant. It also provides services related to transactions in securities. At present two Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) are registered with SEBI. The minimum net worth stipulated by SEBI for a depository is Rs 100 crores. Depository is an institution or a kind of organization which holds securities with it, in which trading is done among shares, debentures, mutual funds, derivatives, F&O and commodities. The intermediaries perform their actions in variety of securities at Depository on behalf of their clients. These intermediaries are known as Depositories Participants. Depository interacts with its clients / investors through its agents, called Depository Participants normally known as DPs.

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For any investor / client, to avail the services provided by the Depository, has to open Depository account, known as Demat A/c, with any of the DPs. A Depository Participant (DP) is an agent of the depository through which it interfaces with the investor and provides depository services. Public financial institutions, scheduled commercial banks, foreign banks operating in India with the approval of the Reserve Bank of India, state financial corporations, custodians, stock-brokers, clearing corporations /clearing houses, NBFCs and Registrar to an Issue or Share Transfer Agent complying with the requirements prescribed by SEBI can be registered as DP. Banking services can be availed through a branch whereas depository services can be availed through a DP. As per the available statistics at BSE and NSE, 99.9 per cent transactions take place in dematerialized mode only. Therefore, in view of the convenience of trading in dematerialized mode, it is advisable to have a beneficial owner (BO) account for trading at the exchanges. However to facilitate trading by small investors (Maximum 500 shares, irrespective of their value) in physical mode the stock exchanges provide an additional trading window, which gives one time facility for small investors to sell physical shares which are in compulsory demat list. The buyer of these shares has to demat such shares before further selling.First an investor has to approach a DP and fill up an account opening form. The account opening form must be supported by copies of any one of the approved documents which serve as proof of identity (POI) and proof of address (POA) as specified by SEBI. Apart from these PAN card has to be shown in original at the time of account opening.
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2.4 SERVICES PROVIDED BY DEPOSITORY

Dematerialization (usually known as demat) is converting physical certificates to electronic form

Rematerialisation, known as remat, is reverse of demat, i.e. getting physical certificates from the electronic securities

Transfer of securities, change of beneficial ownership Settlement of trades done on exchange connected to the Depository

2.5 DEPOSITORIES IN INDIA

At present there are two depositories in India, National Securities Depository Limited (NSDL) and Central Depository Services (CDS). NSDL is the first Indian depository; it was inaugurated in November 1996. NSDL was set up with an initial capital of US$28mn, promoted by Industrial Development Bank of India (IDBI), Unit Trust of India (UTI) and National Stock Exchange of India Ltd. (NSE). Later, State Bank of India (SBI) also became a shareholder. The other depository is Central Depository Services (CDS). It is still in the process of linking with the stock exchanges. It has registered around 20 DPs and has signed up with 40 companies. It had received a certificate of commencement of business from Sebi on February 8, 1999. These depositories have appointed different Depository Participants (DP) for them. An investor can open an account with any of the depositories DP. But transfers arising out of trades on the stock exchanges can take place only amongst account-holders with NSDLs DPs. This is because only NSDL is

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linked to the stock exchanges (nine of them including the main onesNational Stock Exchange and Bombay Stock Exchange). In order to facilitate transfers between investors having accounts in the two existing depositories in the country the Securities and Exchange Board of India has asked all stock exchanges to link up with the depositories. Sebi has also directed the companies registrar and transfer agents to effect change of registered ownership in its books within two hours of receiving a transfer request from the depositories. Once connected to both the depositories the stock exchanges have also to ensure that inter-depository transfers take place smoothly. It also involves the two depositories connecting with each other. The NSDL and CDSL have signed an agreement for inter-depository connectivity. 1 NATIONAL SECURITIES DEPOSITORY LIMITED NATIONAL SECURITIES DEPOSITORY LIMITED [NSDL] is a depository promoted by National Stock Exchange of India Limited, IDBI, UTI, SBI and other financial institutions. NSDL commenced operation in November 1996. 2 CENTRAL DEPOSITORY SERVICE [INDIA] LIMITED CENTRAL DEPOSITORY SERVICE (INDIA) LIMITED [CDSL] is a depository promoted by The Stock Exchange, Mumbai jointly with SBI, Bank Of India, HDFC Bank and other financial institutions. CDSL commenced its operations in July 15th 1999.

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CHAPTER: 3 3.1 INTRODUCTION TO CENTRAL DEPOSITORY SERVICE (INDIA) LIMITED [CDSL]

Central Depository Services Limited (CDSL) is the second Indian central securities depository based in Mumbai. Its main function is the holding securities either in certificated or uncertificated (dematerialized) form, to enable book entry transfer of securities. CDSL is promoted by Bombay Stock Exchange Limited (BSE) jointly with State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank and Union Bank of India and Centurion Bank. A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry. The Depository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialisation of his holdings and transferring securities. The balances in the investors account recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide the investor, at regular intervals, a statement of account which gives the details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of securities.
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CDSL was promoted by BSE Ltd. jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank and Union Bank of India. CDSL was set up with the objective of providing convenient, dependable and secure depository services at affordable cost to all market participants. Some of the important milestones of CDSL system are:

CDSL received the certificate of commencement of business from SEBI in February, 1999.

Honorable Union Finance Minister, Shri Yashwant Sinha flagged off the operations of CDSL on July 15, 1999.

Settlement of trades in the demat mode through BOI Shareholding Limited, the clearing house of BSE Ltd., started in July 1999.

All leading stock exchanges like the National Stock Exchange, Calcutta Stock Exchange, Delhi Stock Exchange, The Stock Exchange, Ahmadabad, etc have established connectivity with CDSL.

As at the end of Jan 2012, Over 10,000 issuers have admitted their securities (equities, bonds, debentures, and commercial papers), units of mutual funds, certificate of deposits etc. into the CDSL system.

A Depository facilitates holding of securities in the electronic form ande n a b l e s s e c u r i t i e s t r a n s a c t i o n s t o b e p r o c e s s e d b y b o o k e n t r y b y a Depository Participant (DP), who as an agent of the depository offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial

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owner (BO) has to open a demat account through any DP for dematerialisation of his holdings and transferring securities. The balances in the investors account recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide the i n v e s t o r , a t r e g u la r i n t e r v a l s , a s t a t e me n t o f a c c o u n t wh i c h g i v e s t h e details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates which were prone to be f a k e , f o r g e d , c o u n t e r f e i t r e s u lt i n g i n b a d d e l i v e r i e s . C DS L o f f e r s a n efficient and instantaneous transfer of securities. CDSL was promoted by Bombay Stock Exchange Limited (BSE) j o i n t l y wi t h l e a d i n g b a n k s s u c h a s S t a t e B a nk o f I n d i a , B a n k o f I n d i a , Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank. CDSL Ventures Limited (CVL) CDSL Ventures Limited is a subsidiary of Central Depository Services (India) Limited. It was set with the motive to provide convenient, dependable services at affordable prices. CDSL Ventures Limited (CVL) is a wholly owned subsidiary of Central Depository Services (India) Limited (CDSL), a leading securities depository in the country. CVL derives its confidence from its team, which has a 'Securities Market Domain Expertise'. CVL has in place a stringent policy and systems to ensure confidentiality of data. Strong electronic and physical security measures ensure security of confidential data. CSDL ventures limited (CVL) is owned subsidiary of central depository services India limited it is one of the leading depository in the country.
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CSDL is promoted by Bombay stock exchange in association with most of the leading banks such as bank of India, bank of Baroda, state bank of India, HDFC. CDSL was set with the motive to provide convenient, dependable services at affordable prices to all the market participants. According to SEBI norms any one can act as depository participant (DP) which includes banks, financial institutes, or even a stock broker and many more. Person who wants to invest in this field is popularly known by the name beneficial owner has to open a DMAT account through any of the depository participant for holding and transferring securities.

3.2 WHY A DEMAT ACCOUNT WITH CDSL

WHY DEMAT ACCOUNT WITH CDSL

CONVINIENCE

DEPEDABILITY

SECURITY

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WHY A DEMAT ACCOUNT WITH CDSL CONVENIENCE: WIDE DP NETWORK: CDSL has over 300 DPs spread around cities/towns across the country, offering convenience for an investor to select a DP b a s e d o n h i s location. ON-LINE DP SERVICES: T h e D P s a n d i t s b r a n c h e s c a n a l s o b e d i r e c t l y c o nn e c t e d t o C DS L thereby providing on-line and efficient depository service to investors. WIDE SPECTRUM OF SECURITIES AVAILABLE FOR DEMAT: Over-5000 users have admitted their securities in CDSL consisting of debt instruments viz. bonds, debentures, commercial paper, government securities, certificate of deposits, etc. Thus an investor can hold almost all his securities in one account with CDSL. COMPETITIVE FEES STRUCTURE: CDSL has kept its tariffs very competitive to provide a f f o r d a b l e depository services to investors. INTERNET ACCESS: A DP of CDSL can provide to its BOs their demat account statement along with a valuation of their holding as per the last
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traded price on B S E a n d a s u m m a r y o f t h e i r t r a n s a c t i o n s f o r a l l a c c o u n t h o l d e r s through CDSLs internet facility easi. The BOs can also avail of the facility of execution of all types of transactions viz, on market, off-market and inter-depository, through CDSLs internet facility easiest. DEPENDABILITY: O N- L I N E I N FO R M AT I O N T O U S E R S : CDSL's system is built on a centralized database architecture and thuse n a b l e s D P s t o p r o v i d e o n l i n e d e p o s i t o r y s e r v i c e s wi t h t h e l a t e s t status of the investor's account. CONVENIENT TO DPS: In case any system related problem develops at the DPs end, it doesn o t a f f e c t t h e B O s i n t e r e s t i n a n y w a y a s t h e C D S L d a t a b a s e i s maintained centrally. C O NT I NG E N CY A R RA NG E ME NT S : CDSL has made provisions for contingency terminals, which enables aDP to update transactions, in case of any system related problems at the DP's office. M E E T I N G US E R ' S R E Q UI RE ME NT S : Continuous updation of procedures and processes in tu n e w i t h evolving market practices is another hallmark of CDSL's system.
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 A U DI T A ND I NS PE C T I O N : CDSL conducts regular audit of its DPs to ensure comp l i a n c e o f stringent operational and regulatory requirements. SECURITY: COMPUTER SYSTEMS: CDSL has state-of-the-art computer systems, data storage methods and communication networks which ensure the security and integrity of all data uninterruptedly. All data at CDSL and is automatically mirrored a n d t r a n s mi t t e d t o a Di s a s t e r R e c o v e r y s i t e , wh i c h i s l o c a t e d a wa y from the main site. UNIQUE BO ACCOUNT NUMBER: Each BO in CDSL is allotted a unique account number. This preventsw r o n g t r a n s f e r o f s e c u r i t i e s i n t h e e v e n t t h e t r a n s f e r e e s a c c o u n t number is keyed in wrongly. SYSTEM ACCESS: Only a person at the DPs end who has been pre authorized by CDSL can access the CDSL system. INSURANCE COVER : C DS L h a s o b t a i ne d a d e q u a t e i n s u r a n c e c o v e r f o r a n y u n l i k e l y l o s s occurring to a BO due to the negligence of CDSL

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3.3 BENEFITS OF CDSL:

Dematerialization of securities with CDSL offers numerous benefits to the issuer of securities. Some of the benefits are: In the demat form transfer of securities takes place at CDSL and if the entire issue of a security is held in demat form, the issuer can s a v e c o n s i d e r a b le t i me a n d mo n e y b e i n g i n c u r r e d o n i t s s h a r e department. D e ma t t e d s e c u r i t i e s a r e n o t s u b je c t t o l o s s , t h e f t , mu t i l a t i o n o r misuse by faking or forging certificates, thereby saving companies from lengthy correspondence, litigation and complaint handling. It will therefore eliminate instances of bad delivery. A l l n o n c a s h c o r p o r a t e a c t i o n s s u c h a s r i g h t s , b o n u s , me r g e r s , consolidations, subdivision of holdings, conversion of securities, issuing securities on mergers/amalgamations and in initial public offerings (IPO) can be handled in demat form without any hassles in the shortest possible time and at very low cost. With the CDSL's centralized database, the issuer can get uptothe-mo me n t i n f o r ma t i o n o n a n y c h a n g e s i n i t s h o l d in g p a t t e r n o f a s e c u r i t y. T h u s , t h e c o mp a n y e f f e c t i v e l y m o n i t o r s t h e c h a n g e i n holding and is alert to any undue threat.
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CHAPTER: 4 4.1 SERVICES OFFERED BY CDSL

The Depository Participant (DP) is the link between the investor, the company and CDSL and provides the following services: Account Opening To utilize the services offered by a depository, any person having investment in any security or intending to invest in securities needs to have a demat account with a CDSL-DP. The holder of such demat account is called as "Beneficial Owner (BO)". A BO can maintain a demat account with zero balance in such account. A BO can open more than one account with the same or multiple DPs, in the same name/s and order, if he/she desires so. The investor can approach any DP/s of his/her choice to open a demat account. Dematerialization Dematerialization is a process by which physical certificates (of shares / debentures / other securities) are converted into electronic balances. A BO has to submit the request for dematerialization by submitting the demat request form (DRF) duly completed along with the concerned physical certificates, to his/her DP. Processing Delivery & Receipt Instructions To settle trades done on a stock exchange (on-market trades) and trades, which are directly settled between two BOs (off-market trades), BOs submit duly completed delivery instructions in the prescribed form to DP. For
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receipt of securities into his/her account, a BO can give one time "standing instruction" to DP. Once such a standing instruction is given to the DP, there is no need to submit separate instructions for receipt every time the investor buys securities. Account Statement Generally a DP sends to the BO, a statement of his account, monthly, if there is any transaction in the account or every quarter if the account is not operated during that period. The balances and transactions can also be viewed by the BOs through CDSL web based facility 'easi' Rematerialisation Rematerialisation is the process by which the electronic balances held in the demat account can be converted back into physical certificates Pledging If the BO decides to pledge any securities in his BO account, he can avail of the same by submitting the pledge creation form duly completed, to his DP. Nomination Individual BOs have a facility for nomination in favor of an individual. If the sole or all the joint holders are deceased, the shares of different companies held in the demat account will be transmitted easily to the demat account of the nominee on submission of the death certificate and transmission form. It may be noted that in the event of the death of one of the joint holders, the securities will be transmitted in the demat account of the surviving holders.
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 Transmission of securities CDSL offers a facility for transmission of balances held in BO account/s (to other BO account/s) if so required due to death, lunacy, bankruptcy, insolvency or required due to operation of any law. Change in Address A BO who wishes to register his change in address submits his/her request in writing to his/her DP. The changes entered by the DP in the CDSL system will be automatically downloaded to all the companies in which the BO is holding securities. This facility offered by CDSL saves money, time and effort for the BO. Bank Account Details SEBI has made it mandatory for companies to print details of bank account of the BO on dividend/interest warrants etc. to prevent possibilities of misuse of the warrants. All BOs should submit a request in writing to the DP if they wish to record / change their bank account details. SMS CDSL sends SMS regarding transactions and modifications in account details to the mobile number registered in the account.

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4.2 FEATURES OF CDSL Convenience:

Wide DP Network: CDSL has a wide network of DPs, operating from over 10,000 sites, across the country, offering convenience for an investor to select a DP based on his location.

On-line DP Services: The DPs are directly connected to CDSL thereby providing on-line and efficient depository service to investors.

Wide Spectrum of Securities Available for Demat: The equity shares of almost all A, B1 & B2 group companies are available for dematerialisation on CDSL, consisting of Public (listed & unlisted) Limited and Private Limited companies. These securities include equities, bonds, units of mutual funds, Govt. securities, Commercial papers, Certificate of deposits; etc. Thus, an investor can hold almost all his securities in one account with CDSL. A BO can also hold warehouse receipts pertaining to commodities, in a demat account. However, a separate account should be opened for holding warehouse receipts.

Competitive Fees Structure: CDSL has kept its tariffs very competitive to provide affordable depository services to investors.

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Internet Access: A DP, which registers itself with CDSL for Internet access, can in turn provide demat account holders with access to their account on the Internet.

Dependability:
On-line Information to Users: CDSL's system is built on centralized database architecture and thus enables DPs to provide on-line depository services with the latest status of the investor's account. Convenient to DPs: The entire database of investors is stored centrally at CDSL. If there is any system-related issues at DPs end, the investor is not affected, as the entire data is available at CDSL. Contingency Arrangements: CDSL has made provisions for contingency terminals, which enables a DP to update transactions, in case of any system related problems at the DP's office. Meeting User's Requirements: Continuous updating of procedures and processes in tune with evolving market practices is another hallmark of CDSL's services. Audit and Inspection: CDSL conducts regular audit of its DPs to ensure compliance of operational and regulatory requirements.
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 Dormant Account Monitoring: CDSL has in place a mechanism for monitoring dormant accounts. Helpdesk: DPs and investors can obtain clarifications and guidance from CDSL's prompt and courteous helpline facility.

Security:
Computer Systems: All data held at CDSL is automatically mirrored at the Disaster Recovery site and is also backed up and stored in fireproof cabinets at the main and disaster recovery site. Unique BO Account Number: Every BO in CDSL is allotted a unique account number, which prevents any erroneous entry or transfer of securities. If the transferor's account number is wrongly entered, the transaction will not go through the CDSL system, unless corrected. Data Security: All data and communications between CDSL and its users are encrypted to ensure its security and integrity. Claims on DP:

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If any DP of CDSL goes into liquidation, the creditors of the DP will have no access to the holdings of the BO. Insurance Cover: CDSL has an insurance cover in the unlikely event of loss to a BO due to the negligence of CDSL or its DPs.

4.3 TECHNOGOLIES USED IN CDSL

Software: The software is developed and supported by CMC Ltd., who have also developed the BOLT system for BSE and Indian Railway Reservation System. The software is a modified version of the banking software-TC4 developed by a subsidiary of CMC Ltd. (in USA), which is currently being used by several banks worldwide. The software has been customised to suit the requirement of CDSL. Hardware The server infra structure is procured from Hewlett Packard Company. The hardware systems at CDSL is powered by mission critical HP UNIX operating system, which is proven for Reliability, Scalability and High Availability These systems are highly scalable and provide main frame class Reliability and Robustness. This system is connected to one of the most robust and secure storage systems in the world from EMC, the world leader in products, services, and solutions for information storage and management. CDSL has invested in an end-to-end fiber architecture storage system, which combines Fiber Channel
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connectivity, non-disruptive capacity and performance scalability, multiple processors, resulting in faster performance, continuous data availability and data integrity. The EMC systems also provide the most advanced software capabilities, including full and incremental replication and anytime/any distance mirroring for business continuity protection. Database Architecture CDSL has gone in for a centralised database system. This centralised architecture provides distinct advantages to the users. The initial set-up cost for Issuer Companies/their RTAs and Depository Participants is low. Information on investor's holdings is available to the Depository Participant and the Issuer or its RTA instantly. Disaster Recovery Site (DRS) From the business continuity angle, CDSL has in place, a robust system with multiple back-up levels including a redundant fail-over cluster and a DRS, Located at a different seismic zone over 1000 kms from the main site. Consequently, in the event of a disaster at the main site, users connected to the CDSL connectivity network viz. Depository Participants (DPs), Clearing Corporations and Registrar & Transfer Agents (RTAs) can electronically connect to the DRS for seamlessly carrying on day-to-day operations. Information Security CDSL has committed itself to highest level of information security practices and is committed to maintain the Confidently, Integrity and Availability of all its information, in any from whatsoever. Towards, this end CDSL has complied with ISO 27001 Standards and has been awarded the coveted ISO 27001 certificate by leading certification body.

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 Business Continuity CDSL is one of the few depository institutions in the world to be awarded ISO22301:2012 certification for it Business continuity Management Systems in June 2013. It is a step to assure all its stakeholders across the world for uninterrupted operations of CDSL depository services.

4.4 CDSL LATEST NEWS:

C DS L h a s s i g n e d a M e mo r a n d u m o f Un d e r s t a n d i n g ( M O U) w i t h Th e Depository Trust & Clearing Corporation [DTCC] of New York, designed to build a cooperative relationship. Under the terms of the MOU, DTCC and CDSL will establish a mechanism whereby board members, senior ma n a g e me n t a n d s t a f f o f b o t h s i d e s c o u l d me e t o n a r e g u l a r b a s i s t o i n c r e a s e m u t u a l understanding a n d e x c h a n g e m a r k e t u p d a t e improvement opportun i t i e s a n d i n f o r m a t i o n o n b u s i n e s s o p e r a t i n g models.

CDSL AND DTCC (U.S.A.) SIGN INFORMATION SHARING AND COLLABORATION PACT

The MOU noted that the parties anticipate developing a closer w o r k i n g r e l a t i o ns h i p i n t h e f u t u r e a n d wi s h t o ma i n t a i n c h a n n e l s o f c o mmu n i c a t i o n f o r e x c h a ng e o f i n f o r ma t i o n a n d t o p r o mo t e v i s i t s f o r reasons of friendship and other business purposes.
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India is one of the fastest growing areas of the world and CDSL is a major part of the securities infrastructure in the country, said Donald F D o n a h u e D T C C C h a i r ma n e l e c t a n d C h i e f Ex e c u t i v e Of f i c e r . T h i s agreement with CDSL will give us a structure to exchange ideas, share market insights and develop coordinated ways of working with each other in what is rapidly becoming a global trading environment. The MOU with DTCC is an extension of the good relations that CDSL shares with them. I see it as an initial formal handshake, the beginning of a long and mu t u a l l y b e n e f i c i a l b u s i n e s s r e l a t i o ns h i p , s a i d Vi j a y V . R a u t , C DS L M a n a g i n g D i r e c t o r & C E O . We a r e s u r e t h a t t h i s e v e n t wi l l r e s u l t i n significant, tangible benefits, not just to both organizations but also to our s t a k e h o l d e r s a n d t o t h e s e c u r i t i e s ma r k e t s a t l a r g e . He f u r t h e r a d d e d , Although DTCC and CDSL have different legislative frameworks and settlement systems; it would be beneficial for both depositories to share their experiences to reduce risks and to enhance the efficiency of systems. We look forward to sharing our experience and tapping DTCC's expertise on global market practices.

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CONCLUSION AND SUGGESTION

An Individual who wants to keep his / her cash safe in a bank has to o p e n a n a c c o u n t wi t h a b a n k a s a f i r s t s t e p a n d ma i n t a i n s c a s h i n b o o k entry form. Similarly, an investor has to open a demat account with any D P o f C D S L a s a f i r s t s t e p t o h o l d s e c u r i t i e s i n d e m a t f o r m i n t h e d e p o s i t o r y s ys t e m. T h e i n v e s t o r c a n o p e n a n a c c o u n t wi t h a n y DP o f CDSL. CDSL system facilitates opening of demat account for different categories of investors. De ma t a c c o u n t o p e n e d w i t h C D S L a r e r e f e r r e d a s B e n e f i c i a l Owner Accounts or BO Account. When securities are held in physical f o r m n a me o f t h e i n v es t o r i s r e c o r d e d i n t h e b o o k s o f t h e c o mp a n y a s R e g i s t e r e d Owner.When the same securities are converted intoele ctronic form and held in demat account, the depository becomesregistered owner of the securities S i n c e d e p o s i t o r y i s a c t i n g a s a custodian of the securities, original investor is legally entitled for all rights a n d l i a b i l i t i e s a t t a c h e d wi t h t h e s e c u r i t i e s a n d i t i s c a l l e d a s B e n e f i c i a l O wn e r . All accounts opened on CDSL system are beneficial accounts irrespective of the type of accounts. A Demat account may be opened and maintained in the name(s) of one person or more than one person. All he joint holders have to sign the application form and the agreement. The supporting documents and p h o to g r a p h s h o u l d a l s o b e p r o v i d e d f o r a l l jo i n t h o l d e r s . Th o ug h t h e beneficial ownership of jointly held securities vests equally in all joint holders, communications about depository account are provided only to the first holder.
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BIBLIOGRAPHY Books:
Financial markets and services Gordon and Natarajan NSEs Certification in Financial Markets

Website:
www.cdslindia.com www.cdsl.net.in www.cvlindia.com www.cdsl.co.in

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ANNEXURE
What is a depository?

Who is a Depository Participant?

What are the services provided by a DP?

What are the benefits of opening a CDSL demat account?

Can a demat account be opened directly with CDSL?

What are the benefits of opening a demat account?

What should an investor do to open a demat account?

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 Is it necessary for a BO to open a demat account with the same DP as that of the broker for settling trades done through him?

How does a BO get information that the account has been updated after each transaction?

Is it mandatory to submit PAN card details?

Is dematerialisation of securities compulsory?

Can a sole holder of the share certificate, add/ delete any name as a joint holder, at the time of dematerialising the share certificate?

What is the procedure for delivery of securities demats form in case of sale of securities?

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 What is the procedure for delivery of securities demats form in case of sale of securities?

What is transmission of dematerialised securities?

What are differed services provided by CDSL?

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