1. Depository Participants (DP): An investor enjoy services of NSDL through the Depository Participant (DP) of NSDL. Banks, financial institutions, brokers, custodians, and any other intermediary are some examples of NSDL which are appointed as per SEBI (Depository Participant) Regulations 2018.
An investor needs to open a depository account with DP to enjoy the depository facilities.
For the Appointment of Depository Participant (DP), there are two requirements to be met:
- Evaluation and confirmation by SEBI
- Evaluation and approval by NSDL
2. Clearing Corporations: All stock exchanges are required to have clearing corporations with a settlement pre-approved by SEBI.
Clearing House and the Clearing Corporations are the mediators between investors (buyers/sellers) of the financial market.
Clearing trades, maintaining margin money, maintaining trade data, regulating deliveries, and updating status reports are some functions that are run by clearing corporations.
3. Brokers: The broker is an intermediate between the investor and the associated clearing corporations.
The brokers do not have any ownership right on the shares of the investors. All brokers must have a clearing account with any DP across the country.
The said clearing account can be utilized for the propose of receiving and transferring the shares from one party to another.
4. Issuers: To become an insurer, the agency must be able to provide dematerialization facilities to the shareholders.
An issuer needs to submit the required documents including the letter of intent and financial documents to NSDL for the last two years.
Thereafter, the NSDL forwards a blank Tri-partite Agreement to Registrar and Transfer (R&T). Then the R&T agents and the issuer sign the agreements and sent the same to NSDL.
5. Registrar and Transfer (R&T) Agents: Under the NSDL the issuer can create and extinguish securities held in the Demat form in two ways.
a) Dematerialization: Demat Account is an account where securities are held in electronic form. In the Demat account, investors can hold all certificates of financial instruments such as Stocks, Mutual Funds, Bonds, etc. in one single account.
b) Rematerialization: It is a process under which the securities are held in electronic form and converted it into a physical certificate. Under the rematerialization, the issuer instructs NSDL to debit all eligible beneficial owners with securities as per their rights.
Then the issuer may utilize the DPM-SHR (a computer software set up) from the R&T agent to affect these all actions. Hence, the R&T agent lends the required computer software to confirm and execute these activities.
7. Clearing Member Account: There are three parts of Clearing Member account:
a) Pool Account: Shares are received from selling clients in the pool account. Transfer to buying clients is also done via the pool account.
b) Delivery Account: Shares received from selling clients are moved from the pool account to the clearing corporation through the delivery account.
c) Receipt Accounts: Shares are received in the pool account from the clearing corporations through the receipt account.