A depository is an entity which helps an investor to buy or sell securities such as stocks and Bonds in a paper-less manner. Securities in depository accounts are similar to funds in bank accounts. A depository institution provides financial services to personal and business customers. Deposits in the institution include securities such as stocks or bonds.
The institution holds the securities in electronic form also known as book-entry form, or in dematerialized or paper format such as a physical certificate. Companies become members of depositories and keep electronic records of all their issued equity and debt securities with the depositories.
The Securities and Exchange Board of India (SEBI) is responsible for the registration, regulation and inspection of the depository. A depository participant is also answerable to the SEBI. It can be operational only after registration with SEBI post recommendation by NSDL or CDSL.
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