Central Depository Service
How is the transaction of dematerialize securities carried out in the market?
The transaction of dematerialize securities in the market in much simpler than the physical one. After the transaction is carried out in the market, there are two activities that need to be carried out i.e. Money Pay-In/ Payout and Securities Pay-In/ Payout. The process of Money Pay-In/ Payout is the same as the old one which is described through the diagram below whereas the securities transfer is different which is dealt in this answer.
Once the transaction is carried out in the market, the seller need to provide the instruction slip to broker (or it can be handed over to DP directly also) then the broker provides the instruction slip to DP, accord to which DP transfer the securities into the broker’s clearing account, this process need to be completed within T+3 working day.
After the transfer is made to Broker clearing account, the CDSC through their system on T+3 checks the broker clearing account and debits the brokerage account and credits in a main clearing account. Following the transfer of securities in the main clearing account, the CDSC as per the transaction carried out, debits the main clearing account and credit is made into necessary concern buyer broker’s account. Finally after the securities are credited in the buyer’s broker account, the securities are transferred to the buyer’s account only after all the obligation of the buyer is completed.
The following chart will help us to be clearer about the dematerialization clearing system
FIGURE 4: MONEY PAY-IN / PAYOUT PROCESS
FIGURE 5: SECURITIES PAY-IN / PAYOUT PROCESS
