A DP does not have access to account details of BO of any other DP except that account only
which it has rendered the depository services.
A Demat account has become a necessity for all categories of investors due to numerous
following benefits:
Eliminates risk associated with physical certificates: In demat system, the ownership of securities are held in electronic form. Hence, the risk associated with physical certificates such as loss during carrying of certificates from one place to another, worn out, theft, cost incurred while making the duplication of certificates, etc. are eliminated.
Immediate transfer of securities: When an investor buys securities from the market, the
securities are immediately credited into his/her account along with the ownership. The securities
do not have to be sent to RTA for transfers of ownership in demat system. Moreover, the
investors do not have to wait for a long time period to get registered in the book of RTA as the
legal owner of the securities.
Immediate settlement cycle: The transactions of securities are settled within T+3 settlement
cycle in electronic form. At the last day of the settlement cycle, the securities are credited into the
demat account of the buyer resulting the immediate settlement cycle.
Immediate distribution of shares allotted in IPO: The shares allotted in IPO can be easily and
immediately credited in the demat account of investor held with CDSC. Hence, the investor does not have to wait to receive the share certificate from the issuers. This aids to list the securities
immediately in the stock market.
Easy in portfolio management: Investors receive the statement of their account periodically
which helps them in managing portfolio and receiving the detail information about their
investment.
Solve the problem of address change: Investors do not have to inform their individual issuers
about the change of address through correspondence separately. Investors can register the
change through their DP only. DP updates and informs the change to all issuers of the securities
held by an investor through the depository system.
Easy in pledge of securities: In case, the dematerialized securities are pledged, such account can be locked in. While pledging the securities, the securities do not need to get transferred from the pledgor’s account to pledgee’s account.
An investor, already having demat account with CDSC; can open another demat account.
A demat account cannot be directly opened with CDSC. The demat account has to be opened only
through a DP of CDSC.
CDSC offers numerous benefits to the issuers of securities. Some of the benefits are:
- The issuers can save considerable time and money being incurred on its share department in
case of transfer of securities. - Dematerialized securities are not subject to loss, theft, mutilation or misuse by faking or
forging certificates, thereby saving companies from lengthy correspondence, litigation
and complaint handling. It will, therefore, eliminate instances of bad delivery. - All non-cash corporate actions such as rights, bonus, mergers, consolidations, subdivision of
holdings, conversion of securities, issuing securities on mergers/ amalgamations and in IPO
can be handled in demat form without any hassles in the shortest possible time and at very
low cost. - With the CDSC’s centralized database, the issuer can get up-to the moment information on
any changes in its holding pattern of a security. Thus, the company effectively monitors the
change in holding and is alert to any undue threat. - Issuers can save substantial time of managing the share department. It reduces the work
load of the department and allows the management to use the excess manpower in other
productive departments. - New technology like e-Voting system for corporate improves transparency and corporate
governance standards and also helps in reducing the administrative cost associated with
postal ballot while facilitating declaration of results immediately after the close of the
Issuers can hugely benefit from such advanced technology which is possible to
achieve through a central depository company.
The data in CDSC system is very significant. CDSC implies the proper precautions to secure the processed and stored data. This system safe guards the data from unauthorized access, misuse and unpredictable loss. CDSC uses following back up to secure the data:
- Local Back Up
- Remote Back Up
- Disaster Recovery Site
Additionally, DP also maintains Back Up for each day transaction.
DP provides the following services to the investors:
- To open the demat account,
- Dematerialization of securities,
- Rematerialization of securities,
- To maintain record of securities in the electronic form,
- Settlement trades by transferring/receiving the securities from/in BO accounts,
- Settlement of off-market trades that is occurred between BOs outside NEPSE,
- To provide electronic credit of securities allotted by issuers during IPOs,
- To deposit the non financial corporate benefits (such as: bonus, right shares, etc.) issued by
issuers in the demat account of BOs,
To facilitate in pledging of dematerialized securities.
No, different securities issued by the same issuer will have different ISIN code.
An ISIN is a unique 12 digit alphanumeric code given to the securities such as shares, preference
shares, debentures, bonds, etc. when the security is admitted in the depository system. The first
two digits of the ISIN code indicate country of registration for the security.
For instance:
NP E 002 A 01 01 8
NP=Country Code for Nepal
002=Issuer Code
BOID is a unique 16 digit identification number given to BO which is generated only when BO
opens the demat account in CDSC through an authorized DP. BOID must be mentioned in all
future transactions. BOID cannot be duplicate. It means two BOs cannot have same BOID which
replicates that the securities cannot be transferred into the wrong account.
For instance:
