Surety bond plays a major role in the development of the economy. In every business environment surety bonds are the most needed requirement to fulfill their aspects in a correct form. Nowadays, trends have been changed and people want to compile their requirements legally. So, every obligee requires their business to be done legally. Surety bond explains the essential factors and their requirements in the economy. The main purpose of issuing surety bonds is to give a guaranteed performance of contract. Generally, most of contractors enters in to a contract and do not complete the contract as per the terms and conditions of contract. Each party involved in the process has a defined responsibility and role with one another.

In case of breach of contract by the obligator, this surety bonds will be more helpful for the obligee to sue both principal and surety in the court of law. Surety bonds are issued in different types and at different premiums as per the requirements of the obligee. Nowadays, surety bonds are needed in all business environments. A surety bond determines the responsibility and roles of different people who are engaged in the contract. When the person engaged in the business, he is obliged to obtain a license from the department. To obtain this license, the applicant is required to procure surety bonds of many kinds as per their business. Without license, no person can engage in the business, also without surety bonds no person can obtain license from the prescribed department.

Therefore surety bonds describe the responsibility and role played in the economy. Surety bond classifies the main aspects needed for the business and provides a better solution to solve the problem. It offers responsibility to the people engaged as per their functionality and requirements. The roles and responsibility of surety bonds offers a better solution and benefit for the persons engaged. The roles and responsibility of surety bond determines the functionality and consideration of various activities involved in the process. The process will be made essential when it is organized by the contractor properly. It is the responsibility of the obligator to complete the contract within the time and contract price mentioned in the terms and condition of the contract.

The surety bond explains the roles and responsibility of the person involved in the contract, namely the principal, the owner, the surety. The obligator is a person who performs the contract as per the terms and conditions of the contract and gives a guaranteed performance to the owner. The obligee is an owner who has to make payment appropriately to the contractor within the contract time. Surety is a third party involved in the roles of surety bonds. A surety is a person who guarantees the obligee that the principal will perform the contract as per the terms and conditions of the contract. The surety explains the responsibility of the contractor to the obligee with a guaranteed compliance. When the principal fails to perform his obligation, the surety can be asked to complete the contract or pay any compensation for the loss incurred. Therefore surety bond will perform the roles and responsibility for the economy in the prescribed form.

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In recent years exchange traded funds (ETF’s) have become the talk of the town. I have recently ventured into the world of ETF’s and have been quite impressed with them.

An ETF is similar to a mutual fund with the exception that it is traded like a stock. The nice thing about ETF’s compared to mutual funds is the initial cost. Most quality mutual funds will require a $3,000.00 initial deposit; while ETF’s can be started for as little as $500.00. ETF’s usually track a specific sector or index, and new ones are being created all the time.

The advantages of ETF’s are their cost, liquidity, and the ability to give investors instant diversification. It is much easier to buy an ETF than to buy a basket of stocks on your own.

Some argue that the disadvantage of ETF’s is that they are relatively new and do not have a long enough track record. However, I think ETF’s have been around long enough now that investors who take their time can build a very solid portfolio consisting of ETF’s.

If I was given the chance to start over again, I would definitely purchase ETF’s before I started to invest in individual stocks. Investing in individual stocks for a person that is completely new to the market is simply not the way to go in my opinion. There is so much to know and learn about investing in individual stocks that make it almost impossible for a new investor to be successful. Therefore, I think the best advice for a person new to the markets is definitely to start with ETF’s or at least a mutual fund.

Remember there are sharks out there on Wall Street looking to take the money out of the hands of the small individual investor. However, if you keep your investment portfolio well-diversified it is harder for them to manipulate the markets as a whole as opposed to one individual stock.

Chad Surges has a Bachelor’s Degree in Business. He invites you to
visit his website for free information about different investing techniques and
strategies: http://www.lucky-dog-investing.com

Did you ever want to go back in time, and just do the opposite of what you actually did? Well then maybe you should become a contrarian investor. A contrarian investor is someone that prefers to do the opposite of what everyone else is doing. These investors search for well-known companies that mainstream investors have forgotten about.

In the 1990’s when other investors were buying the high-flying technology stocks contrarian investors stayed away from them. After these stocks crashed, contrarian investors waited in the wings and then bought up shares in companies like Xerox. This was based on the fact that Xerox was a sound company that other investors had fallen out of favor with even though eventually it would rebound.

This type of trading involves a lot of fundamental analysis to figure out which companies will actually rebound, even though many other investors currently want nothing to do with it. Contrarian investors also love it when the media talks bad about a well-known company. This is because it will more than likely cause some investors to sell shares in a panic thus lowering the price of an other-wise sound company.

I personally agree with some aspects of the contrarian investors mind. I think chasing and believing news stories about stocks that everyone else is chasing too; is one of the worst ways for an average investor to make their investment choices. A contrarian investor has much more discipline and patience than an average investor who is just following the crowd. With that being said, many people simply will find it difficult to adapt into the contrarian investors mindset because people tend to follow the crowd. It is hard for a simple investor to buy a stock that no one else appears to have a desire to own. However, if you have been following the crowd and getting burned with your investments; then maybe it is time to start doing the opposite of what everybody else is doing.

For more information please visit: www.lucky-dog-investing.com/contrarian-investing.html

Chad Surges has a Bachelor’s Degree in Business. He invites you to visit his website: Lucky Dog Investing

In the late 1990’s many investors fell victim to the momentum investing craze that was sweeping the country. It seemed that no matter what stock someone bought the price of that stock would always go higher and higher. Many new investors even quit their jobs to become day-traders. Unfortunately, this all came to a crashing end when once high flying internet stocks came crashing back to reality.

Momentum investors look for stocks they feel are ready to take off with explosive growth upwards such as the internet stocks of the 1990’s. These investors buy stocks that may already be considered high priced with the belief that the stocks are going to continue to go up in price.

In the 1990’s simple news stories were sending stocks soaring even if those stories were not necessarily based on facts. Some stocks actually jump as much as 20 points in one day based on rumors alone.

Momentum investing is definitely based on the belief that an extended bull market is in effect. This method also requires a lot of knowledge about technical analysis. The biggest problem with being a momentum investor is you simply do not know for sure when your momentum will run out such as it did in the late 1990’s. While a momentum investor may have some success with an occasional huge gain; they will also more than likely get stuck with over-priced stocks that simply take a sudden and drastic turn for the worse. Many professional traders will tell you the average investor will lose if they try momentum investing, because the professional investor will always have the upper hand when it comes to drastic downturns in the market. Therefore, the average investor who is trying to chase a stock higher will be left holding the bag of a stock that will soon be crashing down.

I am personally not a fan of chasing stock prices higher. It simply is a bit too much of a gambling method for my taste. I truly believe that smart, slow, and steady investment strategies will always result in wiser investment decisions.

For more information please visit: www.lucky-dog-investing.com/momentum-investing.html

Chad Surges has a Bachelor’s Degree in Business. He invites you to visit his website: Lucky Dog Investing

The most well-known investment strategy in the world is the buy-and-hold strategy. The thought is that if you buy stock in a fundamentally sound company, then overtime that stock should be worth more than what you paid for it to begin with. One of the advantages of the buy-and-hold strategy is that the investor does not have to constantly watch his or her stocks. Investors who bought into companies such as IBM and GE in the early days saw their investments rise dramatically year after year without much effort. Another benefit of this strategy is that you will not be paying a lot in commission cost, because you are not constantly buying and selling stocks. This strategy works very well as long as there are more bull markets than bear markets.

Buy-and-hold investors try to hang on to a stock as long as a company remains fundamentally sound. They do not tend to chase stock charts or news. They simply look at the bottom line of the company itself. One of the most successful buy-and-hold investors in the world is Warren Buffett. If you look at many of his investments they tend to be in boring companies as opposed to high-flying technology stocks.

The main problem with the buy-and-hold strategy is it fails miserably in bear markets. Individual investors who hold onto stocks no matter what may find themselves losing everything they have gained if they can not recognize the signs of a bear market. This is brought on by the belief that eventually all stocks they own will have to return back to their original price. The truth is though that many stocks may never return to their past glory thus leaving the buy-and-hold investors hanging onto a huge loss year after year.

I personally have never been a big fan of this strategy, and feel it holds back potential huge gains that can be made with a little more hands on involvement with your portfolio. If you are someone that prefers the hands off buy-and-hold strategy, I still believe it is a must to use stop-loss orders to protect your investments when bear markets occur.

For more information please visit: www.lucky-dog-investing.com/buy-and-hold.html

Chad Surges has a Bachelor’s Degree in Business. He invites you to visit his website: Lucky Dog Investing

While preparing for a big tournament, no matter what it is, you will spend many hours planning and preparing. If it is a physical sporting type of event, you will train and work out extra hard. If it is more in the thinking category, you may study and work your brain in memorizing. An individual retirement account is much the same. You will need to plan and prepare for your future. There are things about the planning that you should consider much the same way as preparing for that big tournament. You want to come out a winner and not a loser. If you don’t put some effort and time in it, you will not be victorious in the end. This article will expose the truth about what an individual retirement account is for and some things to consider when you are in the planning stages.

We need to be training up our young people in the importance of an individual retirement account. I can remember thinking in high school that I hope my parents live long enough to see me married and have children. My parents weren’t that old, but to me at the time it seemed they were. Maybe as people are living longer lives this might not be so with young people, but I know it is with grandchildren because my own have said things to me that reminded me of what I used to think. Now is the time to get them thinking of college and their own futures, and an individual retirement account can and should begin at a young age.

Some things to consider when planning an individual retirement account is how much money it will have acquired at the age of retirement. This will help you in determining if this retirement fund will be enough for you to live on at that age. You will need to look into the future and set a future budget that you can reasonably live on. Make sure you include extra expenditures and trips that you may want to take. Once you have somewhat determined this amount of money requirement, then you can know if the plan you have is going to be enough, or if you will need to add more to your individual retirement account.

There are many businesses that can help you plan your individual retirement account. They can help you somewhat determine how much money you will need to have acquired in order to live the lifestyle you plan to live. There are many calculations to consider when planning a retirement. Will you be debt free. Will you own your own home by then and if not, can you afford the mortgage payment. Don’t let your individual retirement account become an overwhelming project, but a wise person will make plans for their future. Don’t be caught off guard because the unexpected can happen. Just remember an individual retirement account is for your own welfare in the future, so whatever you do, don’t wait too long to get one started.

If you need more helpful information on Retirement try visiting http://retirement-life-today.com, a website that specializes in providing helpful tips, advice, and retirement resources to include Individual Retirement Account.

Producing a high probability trade forecast is not easy. Just as difficult is determining the best trading strategy and vehicles to capitalize on the forecast. Read on to learn some of my favorites trading strategies.

How about futures contracts? Is there a way to reduce our risk when buying futures? The risk problem with futures is they are marked to the market. This means they always have a “delta” of 1.0, meaning they track the cash market closely. With options, as the market moves against you, the delta will shrink and erode more slowly. Plus, you can only lose what you paid for the commodity option.

With a futures contract, it’s more like trading on a razor’s edge. The advantage is the futures contract does not erode in premium like an option. Generally, if a cash market does not move for two months, the future stays flat with little or no loss while the option will surely lose its premium value.

So how do we hedge our futures contract? Here’s how: Let’s say we go long a futures contract. We then buy a put option with a strike price that is near the current futures contract price. If the market went sharply against us, normally the loss could be very large - holding a naked future.

But with the put option hedge, loss is limited to the premium we paid plus the difference between the option strike price and where we put on the futures contract. Bottom line is we can use the option as our synthetic futures contract “stop loss” order. If the maximum we can lose with the put option hedge is $1,000, we know our true risk no matter what happens.

The advantage here is STAYING power. Let’s say the futures contract (with no hedge) took a $3000 dip against us, but then rallied to finally make a big profit. We would have probably been stopped out holding the naked futures contract, whereas the option hedge would let us ride through the adversity with a maximum limited loss at any time of $1,000, until option expiration. In addition, we have protection from an overnight market gap surprise. This one benefit alone may be worth the hedge.

Trading futures while using this option hedging technique will take some “insurance premium” profit out of the bottom line, but when you consider the possible risks of holding naked futures overnight, one has to wonder why someone would not always want to make their stop loss order in the form of a hedged long put. (Or for a short future, use a long call hedge)

Just having a market forecast is not enough. Not every “low-risk, high probability” trade works as we expect. Some turn into high-risk, low probability trades. Having a few strategies like this to reduce our risk will shave profits somewhat, but will usually help our equity curves to trend smoother without the chaotic dips.

Account survival is first, but second is a smooth, up-trending account equity curve. It is well worth the small hedging premium we pay. Scaling in and scaling out in both price and time will also help to smooth out this curve.

Having these techniques available to you will give you more confidence to hold through adversity for the bigger moves. It will also reduce your fear of market unknowns.

Good Trading!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, “Thomas Commodity Trading Course” - they’re all free. http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com

Producing a high probability trade forecast is not easy. Just as difficult is determining the best trading strategy and vehicles to capitalize on the forecast. Read on to learn some of my favorites trading strategies.

Another method to trade a projected move is to write a commodity option and protect it with another one of a different time frame. The choice depends on the price of the options and their time curves.

Let’s take an example. I remember a time when sugar was selling for about 6 cents and you could cheaply a buy 7-cent call out for 12 months. There was barely any premium in them. At the time you could sell the close in 2 month sugar 6.5 calls for a reasonable premium and continue to repeat this until the 12 month call expired. This would permit about six hedged writes over a year’s time.

These were low risk commodity option trades because the risk was only $625 a trade, being protected by the long call. Finding a long term “insurance policy” option like this and using it to keep rolling over short term options writes is a great technique.

This technique will not work if the market is real active and running, but if you catch a market that is asleep, buy the cheap, far-out in time hedge. If the commodity futures market then comes to life and option premiums expand, you will do even better to cover the option writes and hold the original call for the rally.

The opposite of this method can sometimes be the right choice also. Let’s say you expect soybeans to trend higher over time. If we write a close in strike put option with lots of time, we will collect a hefty premium. If the market is destined to trend higher, then the biggest risk is probably within the first month or two. If we can make it through the first two months, perhaps the underlying futures market will have gone far in our favor.

Buying a cheap put that has only a month or two until expiration will give us the needed protective hedge. After two months, if the market makes a favorable rally, we will be out of immediate danger as the short-term put option expires.

By doing this we pay a small premium for insurance, but get to keep the majority of the initial write premium in the following months, assuming the market holds firm or continues to rally.

Bear in mind that simply writing commodity options without predicting direction is a wash over the long term. Generally, the commodity market will not pay you simply to sell options in a range. You need to be useful by taking on risk. If simply selling options in a range worked profitably for the long term, everyone would be doing it and eventually the premiums would erode to the point of being minuscule.

There are other commodity option trading methods such as buying a call and selling a higher call to help pay for the first. And there’s a high-risk method of buying a call and selling two puts to fully pay for the call – but this is like holding two naked long futures and is not achieving our goal of reducing risk.

I find the best method for developing an option strategy is to first find a high probability, low risk futures trade. You MUST forecast direction to get an option edge, even when writing them. This forecast can even be a chopping market to write options or trending market for option position trades or spreads. Then use option analysis software to scan for the best option combinations to do the job.

Some traders make the mistake of relying entirely on the option analysis program to find undervalued or overvalued options, etc. But options are often that way for a reason and the market is reasonably efficient. You need to know direction.
Sometimes the forecast is questionable or the options are too expensive for buying or too cheap for selling, etc. It’s all a balancing act to finally come up with the optimum plan for a particular market.
More on this in later articles.

Part Three of Three Parts - Next

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, “Thomas Commodity Trading Course” - they’re all free. http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com

Producing a high probability trade forecast is not easy. Just as difficult is determining the best trading strategy and vehicles to capitalize on the forecast. Read on to learn some of my favorites trading strategies.

Let’s say you’ve done your homework. You’ve identified a pivot point, a futures market direction and have projected a time frame for the move. The only thing missing is the price amplitude. In other words, how big or small will the price move be?

Generally, the magnitude of the move will always be the unknown. With TimeLine forecasts we will always have an idea of the direction and time frame, but it is up to real world commodity market forces to decide how far the move will carry.

The way to handle price uncertainty is through time and price diversification. Since we don’t know how far price will carry, we need to have a commodity trading vehicle that will respond to both a small move and a large one as well. If we choose to use commodity options, buying far out-of–the-money options is a bad bet for small price moves.

The move may take place while the option value goes nowhere. In addition, to buy an expensive option with a close strike and lots of time can be a bad bet if the market moves immediately against us and sucks its premium away quickly.

To handle time diversification, we need to compromise by buying two different options with different expiration months. We would buy an expensive option with a close strike with lots of time and also a cheaper, farther away option with less time. (Notice we have price diversification here too)

The long-term option is to be held for the complete move. It will gain similar to a futures contract once it’s in-the-money. The shorter-term commodity option is used as the trading vehicle to be liquidated on the first sharp move in our favor. Getting a fast double or triple is a good goal for the shorter-term option.

An option spread (selling an option against the purchase) is another way to take in some premium to help pay for the option purchases. Also, “granting” to create a “free” option trade is another technique. These more complex option strategies are well covered in other lessons.

To get even more price diversification, we scale out on price. And we get our time diversification by scaling out in time too. No one knows exactly when and where a price move will end. Simply having two completely different commodity options and scaling out will result in both time and price diversification when we liquidate.

How do we handle profit taking for the longer-term option? One way is to grant another option against it or to sell a futures contract as a hedge when a short-term rally has peaked. This hedge is removed once the correction is over. Read a complete treatment of this technique under our free course lesson #26 entitled, “The Thomas Swing Method.”

Part Two of Three Parts - Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

Thomas Cathey - 27-year trading veteran heads the managed futures division of Thomas Capital Management, LLC. View his TimeLine Trading market predictions and get his complete 44+ lesson, “Thomas Commodity Trading Course” - they’re all free. http://www.thomascapitalmanagement.com/commodity/welcome.htm Main site: http://www.ThomasCapitalManagement.com

“A Review on Depository Services in India”

Abstract
Dematerialization or demat is a process to convert the securities held in physical form into an electronic form or to directly allot securities in electronic record form. These electronic records of securities are shown as “electronic balances” in the demat account through a depository participant (DP). DP provides a link between the account holder (beneficiary owner or BO) and the company on one hand and National Securities Depository Limited (NSDL) and the BO on the other hand.

1. Process of Dematerialisation
The investor (demat ac holder) should approach the DP for conversion of physical shares into electronic form, for which the demat ac holder should submit the physical shares to the DP. The investor before submitting the shares should sign across the physical shares “submit for Dematerialisation “, then the DP checks the signature and names of the shares holders and after he/she will send a request to the registrar of the companies whose shares are to be dematerialized through National Securities Depository Limited (NSDL). To verify the genuineness of the shares and names of the shares holders, usually takes about 1 week, after that the DP will approach the registrar with a request to convert the shares into electronic form, the registrar will take the physical shares and will issue electronic shares. The registrar will inform NSDL that the shares are converted into electronic form, after that the registrar will inform the DP that the shares are credited into the investor’s demat a/c.
The entire process will take about 20-30 days depending on the company and the number of shares to be converted
2. Objective of promotion of NSDL
National Securities Depository Limited (NSDL) was established by passing the securities act of 1996. NSDL was promoted by the industrial giant called Industrial Development Bank of India (IDBI) and mutual fund giant Unit Trust of India (UTI) and the National Stock Exchange (NSE).
The shareholders of the NSDL comprise of the following
• State Bank of India
• Global Trust Bank
• HDFC Bank
• Canara Bank
• Dena Bank
• Deutchese Bank
NSDL was promoted with the objective of providing credible, dependable, convenient and secure service along with objective of promoting dematerailisation of shares and involving as many co’s as possible and to make the trading on all stock exchange through demat form.
The following stock exchange are connected to the NSDL for trading in demat form only
1. National Stock Exchange
2. Bombay Stock Exchange
3. Bangalore Stock Exchange
4. Lucknow Stock Exchange
5. Ahmedabad Stock Exchange
6. Kolkata Stock Exchange
7. Delhi Stock Exchange
8. Madras Stock Exchange
9. Indore Stock Exchange
10. OTCIE
3. Depository

A Depository can be compared to a bank for shares. Just as a bank holds cash in your account and provides all services related to transaction of cash, the Depository holds securities in electronic form and provides all services related to transaction of Shares / debt instruments. A depository interacts with Clients through a Depository Participant (DP) with whom the client has to maintain a Demat Account. Thus an investor who wishes to avail of all Depository Services has to open a Demat Account with a DP. The first depository to commence operation is National Securities Depository limited (NSDL). A depository to commence business must register with Security and Exchange Board of India (SEBI). Once SEBI gives the certificate of commencement of business it can start its operations. NSDL commenced its operation on November 8, 1996.

4. Depository Participant
Depository Participant is the link between investors and the NSDL, he play a major role in the depository system. Every investor who wants to hold shares in Demat form must open account with a DP of his/her choice. The DP provides all the services relating to transmission of shares and for this service DP levy some charges which is to be paid by the account holder, and charges for annual maintenance which is to be paid by account holder, in turn the DP provide clients with passbook and delivery instruction slips to operate from his Demat ac .
4.1 Brief of Various Depository Participants
Stock Holding Corporation of India (SHCIL) is the 1st DP to be registered with the NSDL and it is the largest DP with over 6 lac investor accounts. SHCIL is known for its aggressive marketing and it offers its facility for investors (individual, corparates as well as clearing ac for broker) of all types.
SHCIL was promoted by the major financial & investment institutions and insurance companies viz…IDBI, ICICI, IFCI, IIBI, LIC, GIC and its subsidiaries for providing custodian & related services. SHCIL has a cluster of inter-linked online branches, with over 130 offices & more than (400 franchisees). With its vast cover, SHCIL has the custody of over 130,000cr of clients’ assets. SHCIL Provides the following services:
1. Demat services (individual, brokers & corporate)
2. Loan against shares
3. Fund invest advisory services for mutual funds

4. Stock invest (buysell shares through internet)
4.1.1 HDFC BANK
HDFC Bank commences its depository services in 1997. HDFC was promoted by Housing Development Finance Corporation. It is one of largest DP with both NSDL &CDSL. HDFC has over 50 branches and more than 100 service centers spread all over the country with more than 4 lakh ac. HDFC offers its service to investor, corporate and well as clearing member ac. HDFC is backed by state of art technology network, it has vast gamut of schemes catering to need of the investors, brokers, corporate etc .
Service provide include:
• Demat ac (individual broker)
• Loan against shares
• Advisory services to client
• Internet service

4.1.2 IDBI
Industrial Development Bank of India is a major player in the depository system with a proven record in its cherished history; it is one the first player to offer Depository services to its ever-growing clients. With a vast network of state of art branches it offers Depository services to more than 3 lakh clients spread over the entire country
The services provided include:

• Demat ac (individual brokers)
• Advisory service
• Loan against shares and
• Internet facilities to its clients.
4.1.3 Karvy
One of the leading regional players with a strong presence in Hyderabad, karvy is always in the forefront in providing Depository services to its clients which are more than 3 lakh. Karvy not only provide Depository services but is also a dominant player in the registrar of companies. Majority of companies listed in Hyderabad stock exchange having karvy as their registrar it ahs vast network of branches to provide service to its growing clients.
The services provided include:
• Demat ac (individual & clearing member)
• Loan against shares
• Internet facilities (where by client can give online instruction)

5. Operational Process From The Side Of Investor & Speculator
Procedure: Trading in dematerialized securities is done through your broker just like physical trading.

5.1 Sell Dematerialized Securities:
You give instruction to your DP for debit of your depository account and credit of your broker’s clearing member account at least 24 hours i.e., one working day prior to the pay in date or before the deadline prescribed by your DP, so that your broker‘s clearing ac is credited at the time arranged with him. This instruction should be given using “delivery instruction slip “allotted to you by your DP. On the pay in day, your broker gives instruction to his DP for delivery to Clearing Corporation clearing house of the stock exchange. The broker receives payment from the clearing corporationhouse. You receive payment from the broker for the sale in the same manner you receive for a sale in the physical form

5.2 Buy Dematerialized Securities
You purchase securities in any of the stock exchange connected to NSDL through a broker of your choice and make payment to your broker. make sure you tell your broker that you want only demat shares, broker arrange payment to clearing corporationhouse of the stock exchange ,broker receives credit in his clearing ac with his DP an the pay out day. The broker immediately transfers these securities to your depository account. Broker gives instruction to his DP to debit his clearing ac and credit your depository account
Securities & Exchange Board of India (SEBI) through a circular dated march 3rd2003 has reduced the rolling settlement period from T+3 to T+2 days, beside that it has made mandatory that all trading taking place in all stock exchange must be done only in demat form, rolling settlement refers where each trading not only consist of trading but also settlement day, with the advent of T+2 day rolling settlement, it becomes imperative that all trades must be settled within 2 days, this can be possible only when settlement and transfer can take very fast ,this is possible in demat form only. Beside that no Investor can sell physical shares more than 500 in quantity without dematerialization of shares.

5.3 Procedure of T+2 Rolling Settlement
T: trading day, where buying and selling takes place
T+1 day: by 11.30 am the investors and speculators have to give confirmation by Giving Instruction to the DP
T+2 day: the DP has to download the instruction file from the NSDL and execute the same by 2.30 p.m.
6. Present Status Of Dematerialization:
6.1 Investors:
At present there are 37,68,012 Investors accounts from within the country and abroad 3567 clearing member (share brokers) account have been opened to facilitate trading And settlement of Demat shares in the stock exchanges connected to NSDL.
Table 1 shows the growth in Investors account
over a period of three years.
Month –year client Ac
(Lakhs)
June 01 34.93
June 02 37.41
June 03 37.68
Source: www.nsdl.co.in

6.2 Settlement:

At present, a total quantity of 162 cr shares having a value of Rs 13,013 were settled in Demat form in the stock exchanges connected to NSDL.

Table 2 shows the settlement figures over the past three years

Month year Settlement qty settlement value (cr)
June 01 66 7,665
June 02 141 13,238
June 03 162 13,013
Source: www.nsdl.co.in

6.3 Companies:
There are about 4,854 companies that are available for Demat. Table 3 indicates the Increase in the numbers of companies joined NSDL over a period of three years.
Table 3. The Increase in the numbers of companies
Joined NSDL over a period of three years.
Month-year no of co’s
joined
June 01 2981
June 02 4324
June 03 4854
Source: www.nsdl.co.in

6.4 Debentures / Bonds:

At present 517 issuers have issued 9989 debenturesbonds in Demat form .3340 Instruments have been redeemed and 6649 instruments are available for Dematerialisation. Table 3A shows the growth over a period of last three months.

Table 3A. The growth over a period of last three months
Month-Year

No of (cr) Issuers No of Instrument

Demat value
(cr)

April 03 499 6425 192670
May 03 509 6434 197609
June 03 517 6649 203773
Source: www.nsdl.co.in

6.5 Commercial Paper:

At present there are 322 issuers who have issued 3840 commercial paper in Demat form .3881 Instruments have been redeemed and 459 commercial paper are available for Dematerialisation. Table 3B shows the growth over a period of last three months.
Table 3B. The growth over a period of last three months
Month-year No of issuers No of active instruments
April 03 318 386
May 03 320 429
June 03 322 459
Source: www.nsdl.co.in

7 Dematerialisation:

At present 6887 cr securities having value of Rs 5,81,436 cr were Dematerialised.
Table 4 shows the Dematerialisation figures
over the last three years

Month-year Demat qty(cr) Demat value(cr)
June 01 3862 350497
June 02 5677 446776
June 03 6887 581436
Source: www.nsdl.co.in

8 Depository Participant:

At present 213 Depository Participant are offering Depository services .DP services are provided from 1719 locations across the length and breadth of the country.
Table 5 shows the steady increase in the number of DP’s.
Month-year No of DP’s
June 01 196
June 02 212
June 03 213
Source: www.nsdl.co.in

9 THE DIFFERENT TYPES OF DEMAT AC PROVIDED BY

DEPOSITORY PARTICIPANT

9.1 Beneficiary A/C:

Every investor is provided with an unique a/c which is called.the beneficiary a/c, it
is an unique a/c with 8 digit number which identifies the BO across the depository
system. The depository participant gives the BO a/c holder the following document
• Delivery instruction slip
• Inter-depository transfer slip

• Inter settlement instruction slip
The inter depository receipt is used to transfer the shares from the investor BO a/c to the broker clearing a/c. The investor has to issue this slip to the depository participant 24 hours earlier than pay in time to effect the transfer.
The inter depository transfer slip is used to transfer shares from one depository to another. The inter settlement slip is used to transfer shares from one settlement to another settlement.
9.2 Clearing Account:
Each clearing member of the stock exchange connected to NSDL is required to open one clearing account with a depository participant of his choice, if a clearing member is a member of more than one stock exchange, then one clearing account per stock exchange must be opened.

9.3 Procedure For Opening A Demat Account From Investor And Speculator Point Of View

9.3.1 Investor, both individuals and non-individuals, have a choice to open a demat account with any NSDL DP of their choice. Individual investor can be Indian residents or NRIs. Non-individuals BOs include corporates, FIIs, Mutual funds, Trusts etc also under the scheme of two way fungibility of ADR/GDR, non-residents can open a demat account with an NSDL DP
9.3.2 A BO should consider fee structure, location convenience and the track record before selecting the DP for opening his/her demat account
9.3.3 More than one demat account can be opened in identical names with the same depository and/or with both the depositories
9.3.4 A demat account can be maintained even with nil balance, as there is no minimum requirement of holding any minimum – security balance in a demat account
9.3.5 If securities are already held in joint names, the demat account should be opened in the order of names in which the securities are held .if the securities are held by an individual jointly with different persons, separate demat account will have to opened for each of such combinations, however, if the same person hold securities in different order of their names, one single demat account in names of all these persons (not exceeding 3 persons) would be sufficient, provided the facility of transportation-cum-demat is used .At the time of opening a demat account or anytime thereafter, individual having a demat account in a single or joint names can make, a nomination, in the unfortunate event of demise of one of the joint holders, the securities can transmitted in the names of the survivor holders, but in the event of demise of the sole holder or all the joint holders, the securities cam be transmitted in the name of the nominee. a resident Indian can nominate an NRI or another NRI and similarly an NRI can nominate a resident Indian or another NRI .non individual like corporate’s cannot make nomination
10 Documents required to be submitted at the time of opening NSDL Demat Account

10.1 INDIVIDUAL INVESTOR:
10.1.1 An application in the prescribed form duly completed
10.1.2 Certified copy of an election-id card/passportration card/pan card or driving
10.1.3 license
10.1.4 A certified copy of birth certificate and guardian’s names in case of a minor.
10.1.5 A passport size photograph of each of the applicants with his/their signatures
10.1.6 put across the photographs
10.1.7 In case of any attestation by a magistrate/notary public/special executive magistrate/the name, address and the telephone number of the a magistrate/notary public/special executive magistrate
10.1.8 A copy of the power of attorney, if required
10.1.9 Agreement in the prescribed form duly executed
10.2 Procedure for opening a clearing member account for the share broker
Members of the stock exchange are an important link between investors and the clearinghouse in the depositories system.
Therefore, to settle trades in dematerialised securities, a stock exchange member must open a clearing member account with any DP
This account is meant only to transfer shares to and received shares from the clearing house and hence, the member broker does not have any ownership (beneficiary) rights over the shares held in such an account
Procedure:
10.2.1 Approach any DP
10.2.2 Fill up an account opening form (form taken form DP)
10.2.3 Submit the account opening form along with the following:
10.2.4 A copy of letter give by the stock exchange for allotment of its clearing

member ID-CM ID
10.2.5 A copy of SEBI registration certificate as a stock broker
10.2.6 Sign an agreement with the DP
10.2.7 DP will forward a copy of this application to NSDL
10.2.8 NSDL will allot a CM BP-ID (clearing member business partner ID). This number is of eight characters and appears like IN500025, uniquely identifies the clearing member across the depository system. The clearing member should provide this number (cm bp id) to its clients. Printing it in the contract note
10.3 STRUCTURE OF CLEARING ACCOUNT:
The clearing account is identified on the depository system by its CM BP-ID. The internal structure of the clearing account consists of three parts to facilitate easy book keeping.
10.4 Arrangement of clearing account
10.5 Pool account
10.6 Delivery account
10.7 Receipt account

10.8 Clearing house (CC) clearing corporation (CH)

10.9 Pool account
10.10 Pool Account: It has two roles to play in clearing of securities, viz., before pay-in, the selling client of the clearing member transfers securities from his Client Account to the Clearing Account. After receiving payout, the clearing member transfers securities from his Clearing Account to account of the buying client.
a) Delivery Account: The securities before pay-in, the securities move from the Pool Account to the Delivery Account. This movement will be automatic if clearing member has given such an undertaking to its clearing house/clearing corporation. It will be affected on the basis of instructions received from the clearing house/clearing corporation. If the clearing house/clearing corporation
b) Has not taken such an undertaking, the clearing member to its DP must submit a delivery instruction form. At the time of pay-in, NSDL flushes out the securities in the Delivery Account and transfers the same to the clearing house/clearing corporation.
c) Receipt Account: On payout day, the clearing house/clearing corporation transfers securities to the Pool Account (to the extent of net receipt) through the
d) Receipt Account; this account can be used to trace details of settlement-wise receipt of the clearing members.
10.11 Market Type & Settlement Number
A clearing account can be broken into compartments and sub-compartments. Each compartment can be called as market type and each sub-compartment can be called as settlement number. Hence, if securities are moved to, or moved from any clearing account, apart from the CM-BP-ID, the combination of market type and settlement member must be provided. . A diagrammatic illustration of the internal structure of a clearing account is depicted below

10.12 Settlement Calendar
Settlement calendar is decided by the stock exchange. It contains details for each market type and settlement number. The details for each settlement consist of date of trading, pay-in date, pay-in time, payout date, settlement number etc. Clearing member can obtain the settlement calendar from its own stock exchange. This is also available in the depository software of the DP.
You give instruction to your DP for debit of your depository account and credit of your broker’s clearing member account at least 24 hours i.e., one working day.
11 Conclusion
Thus there has been a revolutionary change in the shres format and stock trading yielding benefits of transparency, quick trasfers, and other comforts.
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** The author is Asst. Professor, Deccan School of Management, Osmania University, Hyderabad-500001 can be contacted at tdbabu17@rediffmail.com
Can be contacted for content writing-summer projects-winter projects at MBA, MHM, and others levels
tdbabu17@rediffmail.com