In India, organizations related to the Capital Markets are controlled by a governing body such as SEBI. The Depositories and Stock Exchanges are the two main type of organizations that will help you to do trading. Depositories help with the creation of a Demat Account and Stock Exchanges facilitate the trading of shares.
Who are the regulators in the stock market?
The responsibility for regulating the securities market is shared by:
- Department of Economic Affairs (DEA)
- Department of Company Affairs (DCA)
- Reserve Bank of India (RBI)
- Securities and Exchange Board of India (SEBI)
Tell me more about SEBI?
SEBI is the regulatory authority in India established under Section 3 of SEBI Act 1992. Its role includes-
- Protecting the interests of investors in securities
- Promoting the development of the securities market
- Regulating the securities market
What is the Depository and Depository Participant (DP)?
A Depository is an organization which holds securities (like shares, debentures, bonds, government securities, mutual fund units, etc.) of investors in the electronic form at the request of the investors through a registered Depository Participant. It also provides services related to transactions in securities. At present two Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) are registered with SEBI. A Depository Participant is an agent appointed by the Depository to provide its services to investors. Eg.: Banks, Financial Institutions and SEBI Registered Trading Members. Angel One is a Depository Participant registered with CDSL.
What should you look for in a DP?
- Lowest transaction charges
- Minimum transfer charges from Demat to Pool or any other Demat
- No charges if shares kept in Pool Account
- Requires no separate Demat Account
- Allows shares kept in Pool Account to be used as Margin for trading
- No interest charged till T+4 days on non-delivery of shares where ‘T’ stands for Trade Day