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Stocksbaazigar Mr. Deepak Doddamani is a Founder of Ratneya Group and Ashwamedh Foundation. He is an entrepreneur since age of 21 and have worked in various sectors like Education, Media, Personal Finance and Social work. More about Mr. Deepak Doddamani MBA (Marketing), B.Tech (Oils), NET qualified in Management, NSE's Certified Investment Analysis Professional, NSE's Certified Marketing Professional Level -4. 15+ years of experience Founder of Ratneya Group Founder of Ashwamedh Foundation Founder of Stocksbaazigar Entrepreneur and Educator Shortfilms Maker Social Entrepreneur Blogger

Types of Orders

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Order types and conditions The system allows the trading members to enter orders with various conditions attached to them as per their requirement. These conditions are broadly divided into Time conditions, Quantity Conditions, Price Conditions and Other Conditions. Several combinations of the above are allowed thereby providing enormous flexibility to the users. 1) Time Conditions: a) Day Order: A Day order, as the name suggests is an order that is valid for the day on which it is entered. It the order is not executed during the day, the system cancels the order automatically at the end of the day. b) IOC Order: An Immediate or Cancel (IOC) order allows the user to buy or sell a security as soon as the order is released into the system, failing which the order is canceled from the system. Partial match is possible for the order, and the unmatched portion of the order is canceled immediately. 2) Quantity Conditions: a) Disclosed Quantity Order An order with a Disclosed Quantity (DQ) allows the user to disclose only a portion of  the order quantity to the market.    For e.g. if the order quantity is 10,000 and the disclosed quantity is 2000 then only 2000 is disclosed to the market b) Security Wise Under Order Quantity Limit (SUOQL) An additional facility for setting up Security Wise Under Order Quantity Limit (SUOQL) for buy and/or sell has now been provided. a) The corporate manager is allowed to set the SUOQL separately for buy and sell orders for each security for all the Branch Managers (BMs) and Dealers (except inquiry only users) under him including himself.  b) It is possible to modify the SUOQL anytime during trading hours. SUOQL should not be set lower than the user limit for that security. For a Symbol, both Buy and Sell quantity can be set to unlimited. c) The used limit field is displayed for buy and sell separately for each security. d) Any activity like order modification or cancellation gets reflected in used limit figure for the respective security and respective side. e) The limit is applicable for a symbol across all series, across all the markets. SUOQL setting option is given in supplementary menu.  f) A bulk upload facility to set the security wise buy sell limit through a (comma separated values) csv file has been provided. In case of failure to upload a particular record/s failure message is written in the input file in the form of an error code. The file is reusable. g) SUOQL bulk upload facility is not available during the market hours. h) After the limit is set successfully, the message is sent to the respective CM/BM/dealer. i) A facility to limit trading to the securities set up in the SUOQL has been provided. If limit trading option is set for a user, then the user is allowed to place orders only for Symbols set in the SUOQL list by the CM. It should however be possible to enable this facility without having any security in the SUOQL list, which in turn prevents the user from entering of any fresh orders. j) Corporate Manager has been given a facility to allow or disallow a user from entering Index orders. By default all dealers will  be allowed to place index orders. Index orders are not validated for the SUOQL limits. However, order since once entered are updated in the used limits. k) It is possible that dealer is restricted to enter order in particular security, but allowed to enter index order and that restricted security is a part of Nifty. l) If the order is modified by CM/BM for a respective dealer then the used limit will  be updated accordingly, but in this case it can exceed the set limit. m) SUOQL used limit will not be validated and updated for Auction orders. Quantity Freeze All orders with very large quantities receive quantity alert at member terminal. If members enter any order exceeding the lowest of the quantity given below, it results in an alert which reads as ‘Order entered exceeds alert quantity limit. Confirm availability of adequate capital to proceed and only after the member clicks the button ‘Yes’ the order will be further processed for execution. Quantity Freeze Parameters 0.5% of the issue size of the security or Value of the order is around Rs. 2.5 Crores or A Global alert quantity limit of more than 25000 irrespective of the issue size of the security, whichever is less. 3) Price Conditions a) Market Order Market orders are orders for which price is specified as ‘MKT’ at the time the order is entered. For such orders, the system determines the price. • b) Stop Loss Order The facility allows the user to release an order into the system after the market price of the security reaches or crosses a threshold price called trigger price. Trigger Price: Price at which an order gets triggered from stop loss book. Limit Price: Price of the orders after triggering from stop loss book. Price Freeze Since no price bands are applicable in respect of securities on which products are available, in order to prevent members from entering orders at non-genuine prices in such securities, the exchange has decided to introduce operating range of 20% for such securities. Any order above or below 20% over the base price should come to the exchange as a price freeze. Market Price Protection Market Price Protection functionally gives an option to a trader to limit the risk of a market order, within a pre-set percentage of the Last Trade Price. The pre-set Market price protection percentage is by default set to 5% of the LTP. The users can change the pre-set Market Price Protection from the Order Limit Screen which can be invoked from the Supplementary Menu. The set percentage will be applicable till the Ntreldr EXE is re-inflated. At the time of order entry, the user can press (page up) when the cursor is in the price field. … Read more

Segments of Scrips traded

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On the Stock Exchanges in India there are thousands of listed companies. Some companies are very large and some companies have small market capitalization. Therefore, the risk involved in investing in these companies varies accordingly. To help Investors in making well-informed decision both the exchanges have divided the Securities in different categories. The scrips traded on the NSE have been divided by the exchange into normal and trade to trade segments whereas in BSE the scrips traded have been classified by the Exchange into A, B1, B2, G, T, F, TS and Z groups Segments of Scrips traded on BSE Group ‘A’ The ‘A’ group contains the list of the most popular stocks. Stocks that are actively traded. Group ‘Z’ •The ‘Z’ Group consists of Equity stocks which are either blacklisted for not following Exchange rules and regulations or has pending complaints from investors or have not made arrangements for dematerialization of their shares. This is a temporary measure for companies till they make arrangements for dematerialization of their securities. Group ‘T’ The ‘T’ Group consists of stocks that form part of the Trade to trade segment. Trade for trade segment is a segment in which no intraday trading is allowed. All trades result in delivery.   ‘A’, ‘B1’ and ‘B2’ group securities which have put by the exchanges in the trade-to-trade segment as surveillance measures and trades which are settled in without netting are included in this group ‘T’. Group ‘B’ The ‘B’ category includes stocks which don’t form part of any of the above Equity groups. Group ‘C’ BSE also provides a facility to the market participants of online trading in ‘C’ group which covers the odd lot securities (i.e. less than the market lot) in A,B1, B2, T,S, TS, and Z groups and Rights renunciations in all the groups of scripts in the equity segment. The facility of trading in odd lot structures not only offers an exit route to investors to dispose of their odd lots of securities but also provides them an opportunity to consolidate their securities into market lots.   The ‘C’ group facility at BSE can also be used by investors for selling up to 500 shares in physical form  which is called as an Exit Route Scheme. Group ‘F’ Additionally, BSE also has the ‘F’ group which denotes the Debt market segment. Fixed Income Securities like bonds and debentures issued by the listed companies or institutions trade under this group. Group ‘M’ and ‘MT’ ‘M/MT’ group consist of stocks forming part of BSE’s SME (Small & Medium enterprise) Group ‘S’ ‘S’ group which is ‘BSE indo-next segment’ contains the share of companies listed on Regional Stock Exchanges having capital of Rs. 3 Crores to Rs. 30 Crores and of those companies already listed on BSE in B1 and B2 groups are allowed to be traded.  It gives exit routes to Investors who traded in RSE and companies a chance to mobilize fresh capital from market. Group ‘TS’ ‘TS’ group at BSE consists of scrips in the BSE-indonext segment, which are settled on a trade-to-trade basis as a surveillance measure. Group ‘G’ ‘G’ group consists of Government securities available for retail investors. Government securities are available on both NSE and BSE. Group ‘I’ ‘I’ group consists of Interest rate underlying securities. Group ‘E’ ‘E’ group consisting of ETF’s (Exchange Traded Funds) What are ‘Permitted Securities’? • Apart from these segments to facilitate the market participants to trade in securities of the companies which are actively traded at other Regional Stock Exchanges but are not listed on NSE or BSE, both the exchanges had permitted trading in securities of companies listed on other Stock Exchanges as ‘Permitted Securities’ It is subject to the companies meeting certain norms specified by the Exchanges in this regard. This segment has been discontinued from the NSE but still exists on the BSE.

Types of order books in trading

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Trading System The trading system operates on a strict price-time priority. Best priced order gets the first priority for matching.  Orders are matched automatically by the computer. If an order does not find a match, it remains in the system and is displayed to the whole market, till a fresh order comes in or the earlier order is canceled or modified. Order Management Order Management consists of entering orders, order modification, order cancellation and order matching. The trading member can enter orders in the normal market or auction market When any order enters the trading system, it is an active order. If it finds a match, a trade is generated. If it doesn’t match, the order becomes passive. Order Book An order book is an electronic list of buy and sell for a specific security or financial instrument, organized by price level. An order book is dynamic and continuously updated in real time throughout the day. There are different types of order books based on the types of orders.  1) Pre-open book An order during the pre-open session is called pre-open order. Orders in pre-open session are stacked in book called pre-open book in order entry screen. At the end of the pre-open phase, the matching of pre-open orders takes place at the final opening price. 2) Regular lot book An order that has no special condition associated with it is a regular lot order. Computer matches regular lot orders with the passive orders in the system. If it does not find a match, it gets stacked in the Regular Lot book as a passive order. Buyback orders are placed through the Regular Lot (RL) book. 3) Limit Order Book Limit orders are orders to buy or sell shares at stated quantity and stated price. If the price quantity conditions do not match, the limit order will not be executed. Limit order book’ also known as ‘open book’ refers to the fact that only the limit orders are stored in the book and all market orders are crossed against the limit order present in the book. 4) Special Term Book Orders with special term attributes attached to it are knows as ‘special term orders’. Currently this facility is not available in the trading system but it will be introduced soon. A special term order entered in system scans Regular Lot book as well as special term books for matching to find the match 5) Stop loss book Stop loss orders are very popular due to their use in risk management. They get executed only when market prices surpass the trigger price. Till then they are stacked in Stop-Loss book. The SL order is either a market order or a limit price order. 6) Odd lot book The Odd lot book can be selected, by selecting the book type OL, to trade in the Odd Lot Market. Lot size is normally 100 shares. Below 100 shares the lot becomes odd lot. Order matching in this market takes place between two orders on the basis of quantity and price. 7) RETDEBT Order Book RETDEBT market orders can be entered into the system by selecting RETBEDT order book  denoted as ‘D’. These orders scan only the RETDEBT Order Book for potential matches. If no suitable match found, it remains as passive order. 8) Auction Price Book A trading members who participates in the exchange initiated auction places orders in Auction Price book. Auctions orders can be initiator orders, competitor orders and solicitor orders.

Stock Trading on NEAT and BOLT

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Trading, Clearing and Settlement The trading in securities is buying and selling of securities listed on the recognized stock exchanges. The clearing is a process of determination of obligations of member-brokers by the stock exchanges after which the same are discharged by the concerned parties by settlement. The settlement is a process of settling of transactions in securities between buyers and sellers by exchange of money and securities respectively.  Stock trading The trading on stock exchanges in India was in open outcry manner till mid 1990s. In order to provide efficiency, liquidity and transparency, NSE introduced, a nationwide, on-line, fully-automated Screen based trading system (SBTS) in November 1994 known as National Exchange for Automated Trading (NEAT) system. BSE online trading (BOLT) by BSE started in March 1995 Screen based trading system NEAT and BOLT are state-of-the-art client-server based applications where at the server end all trading information is stored in in-memory databases to achieve minimum response time and maximum system availability for users. A member, broker enter orders from the Trader Work Stations (TWSs) installed in their offices. A client of these broker can place orders through phone/internet for which he should enter Model Agreement with brokers first. Internet based trading There are many brokers who provide internet based trading facility to their clients. Investors can buy/sell securities through Trader Terminals downloaded on their computers, Trading Apps on their mobiles etc. Both NSE and BSE systems run on ‘Order driven’ systems What is ‘order-driven’ system? In an order-driven system, the traders only put their orders for buying or selling of securities whereas, in ‘quote-driven’ system, the jobbers put buy as well as sell quotes in the same scrip with a price difference. The order-driven system ensures faster processing, matching and execution of orders in a transparent manner. NSE system, is order driven from the beginning while BSE system turned completely order-driven after 13th August 2001. Till then it was both order and quote driven. Trading Hours Regular Trading in equities on the NEAT and BOLT systems are conducted from Monday to Friday between 9:15 a.m. to 3:30 p.m.  Thus uniform trading hours are followed by both the stock exchanges.  Pre-open session : 9:00 to 9:08 Block deal sessions: 8:45 a.m – 9:00 a.m and 2:05 p.m. – 2:20 p.m Closing session: 15:40 hrs to 16:00 hrs Why trade on recognized stock exchanges only? Investors do not get any protection if he trades outside a stock exchange. Investors gets best prices prevailing in the market on Stock Exchanges No counter-party risk involved Access to investor grievance and redressal mechanism of stock exchanges Protection up to a prescribed limit from the Investor protection fund How to know if the broker or sub broker is registered? Investor should check the Registration Certificate issued by SEBI A broker’s registration number begins with letters ‘INB’ and that of a sub-broker with the letters ‘INS’ The maximum brokerage that can be charged by a broker from his clients as commission cannot be more than 2.5% of the value mentioned in the respective purchase or sale note. What is contract note? Contract Note is a confirmation of trades done on a particular day on behalf of the client by a trading member. It imposes a legally enforceable relationship between the client and the trading member with respect to purchase/sale and settlement of trades. It also helps to settle the disputes/claims between the investor and trading member.

Indian Stock Exchanges

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There are 28 official stock exchanges (SE) in India. The largest exchanges in India are Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE) Here are the names of others: Calcutta SE Cochin SE Inter-connected SE of India Multi-Commodity Exchange of India OTC Exchange of India Pune SE National Commodity and Derivative Exchange U.P. SE Vadodara SE Canara SE Ludhiana SE M.P. SE Coimbatore SE Madras SE Meerut SE Over the counter Exchange of India Ahmadabad SE Trivandrum SE Bangalore SE Bhubaneswar SE Delhi SE Guwahati SE Hyderabad SE Jaipur SE Magadh SE Largest Stock Exchanges of India 1) The Bombay Stock Exchange (BSE) It is located in Mumbai It was established in 1875 BSE was founded by Premchand Roychand. The BSE is the World’s 10th largest stock exchange Market Capitalization of BSE is more than $ 2.3 trillion on as of April 2018 5500 companies are listed on BSE Important Indices of Bombay Stock Exchange BSE SENSEX :   The BSE SENSEX (also known as the S & P Bombay Stock Exchange Sensitive Index or simply SENSEX) is a free-float-market-weighted stock market index of 30 well- established and financially sound companies listed on Bombay Stock Exchange. Other: S & P BSE SmallCap ,S & P BSE MidCap ,S & P BSE LargeCap ,S & P BSE 500  2) The NATIONAL STOCK EXCHANGE OF INDIA (NSE) It is located in Mumbai It was established as the first demutualized electronic exchange in India in 1992 It is the world’s 11th-largest stock exchange Total Market Capitalization is more than $ 2.27 Trillion as of April 2018 1952 companies are listed on NSE Important Indices of NSE NIFTY 50 :     The NIFTY 50 index is National Stock Exchange of India’s benchmark broad based stock market index for the Indian equity market. It represents the weighted average of 50 Indian stocks in 12 sectors. Other: NIFTY NEXT 50,NIFTY 500 Who regulates these exchanges? The Indian Capital Markets are regulated and monitored by the Ministry of Finance, The SEBI, and The Reserve Bank of India The Securities & Exchange Board of India (SEBI) is the regulatory authority established under the SEBI Act 1992 and is the Principal regulator for Stock Exchanges in India. SEBI’s primary functions include protecting investor interests, promoting and regulating the Indian securities markets.

Basics of Stock Exchange

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What is Stock Exchange? As per the Wikipedia, A stock exchange, security exchange or bourse, is a facility where stock brokers and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments. Stock exchanges may also provide for facilities like the issue and redemption of such securities and instruments and capital events including the payment of income and dividends. Securities traded on a stock exchanges include stock issued by listed companies, unit trusts, derivatives, pooled investment products and bonds. What is the definition of Stock Exchange? As per the Securities Regulation Act, 1956 Stock Exchange is defined as any body of  individuals,  whether incorporated or not, constituted before corporatization and demutualization under Section 4A and 4B or a body corporate incorporated under the Companies Act, 1956 whether under a scheme of corporatization and demutualization or otherwise, For the purpose of assisting, regulating or controlling the business of buying, selling or dealing in Securities. What is corporatization and demutualization? Corporatization means the succession of the recognized stock exchange, being a body of individuals or a society registered under the Societies Registration Act, 1860, Article 21, by another stock exchange, being a company incorporated for the purpose of assisting in buying, selling and dealing in securities.  Demutualization refers to the legal structure of an exchange whereby the ownership, the management and the trading rights at the exchange are segregated from one another. Features of Stock Exchange It is an organized Security market It is an association of individuals recognized by the Central Government Its membership is not open for everybody Only the members can deal in a stock exchange The Members can buy and sell securities as a broker for and on behalf of their clients The dealing in Stock exchange are under certain accepted code of conduct. It is an important constituent of Capital Market It deals in Second-hand securities Functions of Stock Exchange Continuous and ready market for Securities. Facilitates Evaluation of Securities Encourages Capital Formation Provides safety and security in dealings Regulates Company Management Facilitates Public Borrowings Provides clearing house facility Facilitates healthy speculation Serves as economic barometer Facilitates bank lending Services given by stock exchanges to: Investors Provides liquidity to Investment Provides Collateral Value to Securities Offers opportunity to participate in the economical growth Estimates the worth of securities Offers Safety in corporate investment Economy Brings Economic Development Forecasting the recession Companies Capital Gains and Fund Raising Widens market for securities Creates goodwill and reputation Facilitates fair pricing of listed securities Provides better response from investors Motivates Management of the companies Helps in proper Corporate Governance Encourage to complete documentations on time Facilitates quick selling of Securities

What is Secondary market?

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Capital Markets can be divided into Primary Market and Secondary Market. Secondary market Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock exchange. It is also called as aftermarket. Majority of the trading is done in the secondary market. It comprises of Equity Markets and Debt Markets. What is the role of Secondary market? For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, secondary equity markets serve as a monitoring and control conduit by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions. Functions of the Secondary market Accuracy Function: Price accuracy can reduce the agency costs of management and make hostile takeovers a less risky proposition and thus move capital into the hands of better managers. Accurate share price aids the efficient allocation of debt finance whether debt offerings or institutional borrowings. Liquidity function: The greater the number of investors in the secondary market, more the liquid market. Continuous trading in after-market keeps it highly liquid. Price Discovery function: It provides the instant valuation of securities caused by the changes in the environment. Difference between Primary and Secondary markets Major Players in Secondary Market Brokerages and Advisory Services Commission Broker Jobber Floor Broker Taraniwalla/ Stag Odd lot dealer Budliwala Arbitrageur Security dealers Financial Intermediaries: Commercial Banks, Development Financial Institutions, Insurance Company, Mutual Funds, Non-banking Financial Companies (NBFC) Individual/ Retail Investors Major Instruments in Secondary Market Fixed Income Instruments:    Bonds    Debentures    Term/Fixed Deposit    Preference stock    Mortgage backed of Asset backed securities    Life Insurance    Annuity Pension Plan Variable Income Instruments: Equity Derivative Hybrid Income Instruments: Mutual Fund  Basket D (75% Equity + 25% loan)  Convertible Preferential Share

What is ISIN?

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Each of the securities dematerialized in the NSDL/CDSL depository bears a distinctive ISIN – an identification number. International Securities Identification Number (ISIN) is a unique identification number for each security issued in any of the International Standards Organization (ISO) member countries in accordance with the ISIN standard (ISO 6166). ISO 6166 was developed for use in an international (cross-border) as well as domestic trades. ISIN is a 12-character long identification mark. It has three components – a pre-fix, a basic number and a check digit. The pre-fix is a two letter country code as stated under ISO 3166 The number comprises nine alphanumeric characters  (letter and/or digits).The check digit at the end of the ISIN is computed according to the modulus 10 “Double-Add-Double”. It establishes that the ISIN is valid. Securities issued by the same company, issued at different times or carrying different rights, terms, and conditions are considered different securities for the purpose of allocating ISIN and are allotted distinct ISINs.In India, SEBI assigns ISIN to various publicly traded securities. Different ISINs allocated to the physical and dematerialized securities of the same issue. To illustrate, ISIN INE 475c  01 012                       has the following break up: IN – India E- Company Last digit (2 in this example) – check digit First four digits 475c – Company Serial Number; 01- Equity (it can be mutual fund units, debt or Government securities); 01 – issue number The third digit (E in the above example) may be E, F, A, B or 9. Each one carries the following meaning: E – Company F- Mutual Fund Unit A- Central Government Security B – State Government Security 9 – Equity Shares with rights which are different from equity shares bearing INE number. Whenever dealing with ISIN number, it is important to pay special attention to the third digit.

Rematerialisation Process

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What is re-materialization? Rematerialization is the exact reverse of dematerialization. It Refers to the process of issuing physical securities in place of securities held electronically in book-entry form in a depository. Under this process, the depository account of a beneficial owner is debited for the securities sought to be re-materialized and physical certificates for the equivalent number of securities is/are issued. Re-materialization Process 1.The DP should provide rematerialisation request forms (RRF) to clients 2. The client should complete RPF in all respects and submit it to the DP. 3. The DP should check RPF for validity, completeness and correctness. In particular, the following points should be checked There is sufficient free balance available in the client’s account to honor the re-materialization request. The name of client on RRF is exactly the same as that in the client account. In case of joint holding, the order of names appearing in RRF is the same as in the client’s account. Details like security type, face value, issuer’s name and lock-in status are filled-in correctly. The client has indicated his opinion to receive physical certificates either in jumbo lot for the entire quantity requested or in a market lot. Separate RRF is submitted for ‘free and locked-in securities’. Securities locked-in for a different reason; each ‘ISIN’ securities of different paid-up value; and each client account. RRF is signed by ‘the sole holder in case of single holding; all joint holders in case of joint holding, authorized signatories in the case of corporate accounts, constituted attorney in the case of NRI accounts. 4) If RRF is not found in order, the DP should return the RRF to the client for rectification. 5) If RRF is found in order the DP should accept RRF and issue an acknowledgement to the client. 6) DP should enter the re-materialization request in DPM. DPM will generate a remat request number (RRN) which should be mentioned on RRF. 7) An authorized person, other than one who entered the RRF details in DPM, should verify the details of RRN  and release a request to the depository. 8) DP should complete the authorization of RRF and forward to the issuer or its R & T agent for re-materialization within seven days of accepting it from the client. 9) The issuer of its R & T agent should verify the RRF for validity, completeness and correctness. It should also match the details with the intimation received from the depository against the same RRN. 10) In case the issuer or its R & T agent finds RRF in order, it should confirm the remat request. The issuer or its R & T agent should then proceed to issue the physical security certificates and dispatch them to the beneficial owner. 11) The DP, on receiving confirmation of debit entry in DPM, should inform the client accordingly. The entire process takes a maximum of 30 days. No trading is possible on the securities sent for remat. This is the complete process of re-materialization of securities.

Dematerialization

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What is dematerialization? Dematerialization is the process of converting physical shares into an electronic form. Shares once converted into the dematerialized form are held in Demat account. India adopted the demat system successfully and there are plans to facilitate the trading of almost all financial assets in demat format in the future. Advantages of Dematerialization Share transactions like sale or purchase and transfer/transmission etc. can be effected in a much simpler and faster way.  There is no risk due to loss on account of fire, theft or mutilation.  There is no chance of bad delivery at the time of selling shares as there is no signature mismatch. Transaction costs are usually lower than that in the physical segment. The bonus /rights shares allotted to the investor will be immediately credited into his account. Time and money is saved as you are not dealing in paper now. You need not go to the notary, broker for taking delivery or submitting the share certificate Liquidity is very high in case of demat format as whole process in automated. Interest on loan against demat shares are less as compared to physical shares Investors save stamp duty while transferring shares in demat format. Securities that can be dematerialized According to the SEBI (Depositories and Participants) Regulations, 1996, the following securities are eligible for holding in demat form Shares, Scrips, Stocks, Bonds, Debentures, debenture stock or other marketable securities of similar nature of any incorporated company of body corporate including underlying shares of ADRs and GDRs Units of Mutual Funds, Rights under collective investment schemes and venture capital funds, commercial paper, certificate of deposit, securitized debt, money market instruments, and unlisted securities. Dematerialization Process (as per NSDL website) The client (registered owner) will submit a request to the DP in the ‘Dematerialization Request Form for dematerialization, along with the certificates of securities to be dematerialized. Before submission, the client has to deface the certificates by writing “SURRENDERED FOR DEMATERIALISATION”. The DP will verify that the form is duly filled in and the number of certificates, number of securities and the security type (equity, debenture etc.) are as given in the DRF. If the form and security count is in order, the DP will issue an acknowledgment slip duly signed and stamped, to the client. The DP will scrutinize the form and the certificates. This scrutiny involves the following —Verification of Client’s signature on the dematerialization request with the specimen signature (the signature on the account opening form). If the signature differs, the DP should ensure the identity of the client. Compare the names on DRF and certificates with the client account, Paid up status, ISIN (International Securities Identification Number), Lock – in status, Distinctive numbers etc. In case the securities are not in order, they are returned to the client and acknowledgment is obtained. The DP will reject the request and return the DRF and certificates in case: A single DRF is used to dematerialize securities of more than one company. The certificates are mutilated, or they are defaced in such a way that the material information is not readable. It may advise the client to send the certificates to the Issuer/ R&T agent and get new securities issued in lieu thereof. Part of the certificates pertaining to a single DRF is partly paid-up; the DP will reject the request and return the DRF along with the certificates. The DP may advise the client to send separate requests for the fully paid-up and partly paid-up securities. Part of the certificates pertaining to a single DRF is locked-in, the DP will reject the request and return the DRF along with the certificates to the client. The DP may advise the client to send a separate request for the locked-in certificates. Also, certificates locked-in for different reasons should not be submitted together with a single DRF In case the securities are in order, the details of the request as mentioned in the form are entered in the DPM (software provided by NSDL to the DP) and a Dematerialization Request Number (DRN) will be generated by the system. The DRN so generated is entered in the space provided for the purpose in the dematerialization request form. A person other than the person who entered the data is expected to verify details recorded for the DRN. The request is then released by the DP which is forwarded electronically to DM (DM – Depository Module, NSDL’s software system) by DPM. The DM forwards the request to the Issuer/ R&T agent electronically. The DP will fill the relevant portion viz., the authorization portion of the demat request form. The DP will punch the certificates on the company name so that it does not destroy any material information on the certificate. The DP will then dispatch the certificates along with the request form and a covering letter to the Issuer/ R&T agent. The Issuer/ R&T agent confirms acceptance of the request for dematerialization in his system DPM (SHR) and the same will be forwarded to the DM if the request is found in order. The DM will electronically authorize the creation of appropriate credit balances in the client’s account. The DPM will credit the client’s account automatically. The DP must inform the client of the changes in the client’s account following the confirmation of the request. The issuer/ R&T may reject dematerialization request in some cases. The issuer or its R&T Agent will send an objection memo to the DP, with or without DRF and security certificates depending upon the reason for rejection. The DP/Investor has to remove reasons for objection within 15 days of receiving the objection memo. If the DP fails to remove the objections within 15 days, the issuer or its R&T Agent may reject the request and return DRF and accompanying certificates to the DP. The DP, if the client so requires, may generate a new dematerialization request and send the securities again to the issuer or its R&T Agent. No fresh request can be generated for the same securities until … Read more

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