January 10, 2024

Depository Participant Means

Depository Participant Means

The full form of DP in the share market is “depository participant.” A depository participant (DP) represents an organization, typically a financial institution, brokerage firm, or bank, that provides services related to transactions in securities. Essentially, a DP connects the depository and the investor, converting physical shares into dematerialized form and vice versa.

Contents:

Who Is a Depository Participant?

A depository participant is an entity that is accredited by the depository and falls under the regulatory purview of the Securities and Exchange Board of India (SEBI). The DP is an intermediary and can be a financial organization, bank, or brokerage firm. As intermediaries, DPs provide services related to securities transactions, and Demat account operations and aid investors in navigating the depository system.

Depository Participant Example

A prime example of a depository participant is Alice Blue, a well-known brokerage firm in India. As a DP, Alice Blue gives its investors a smooth way to connect to the depository system. This lets them do things like dematerialize shares, keep their Demat accounts up to date, and more. 

Alice Blue can help you invest in stocks, mutual funds, & IPOs completely free of cost. They provide Margin Trade Funding facility, where you can use 4x margin to buy stocks i.e. you can buy stocks worth ₹ 10000 at just ₹ 2500. 

Difference Between Depository And Depository Participant

The main difference between a depository and a depository participant is that a depository is a centralized facility that holds securities on behalf of investors. In contrast, a depository participant is an entity authorized to offer depository services and acts as an intermediary between the depository and the investors. 

ParametersDepositoryDepository Participant
DefinitionA centralized facility that holds securities in an electronic form on behalf of investorsAn entity authorized by the depository to offer depository services to investors
RoleProvides a secure electronic infrastructure for holding and transferring securitiesActs as an intermediary between the depository and investors, facilitating transactions and providing related services
ServicesSafekeeping, settlement, and transfer of securitiesAccount opening, dematerialization of securities, transaction processing, and other related services
Ownership of SecuritiesHolds securities on behalf of the investorsInvestors retain ownership of the securities held in their accounts
RelationshipThe depository interacts directly with investors, as well as depository participantsThe depository participant serves as a link between the depository and investors
Regulatory OversightIt is governed by securities regulations and regulatory bodiesSubject to regulatory oversight by securities commissions or regulatory authorities
ExamplesNSDL (National Securities Depository Limited), CDSL (Central Depository Services Limited)Banks, financial institutions, and stockbrokers acting as depository participants

Functions Of Depository Participant

A Depository Participant (DP) serves as a crucial link to the depository system for investors, offering services beyond just access. They assist in converting physical securities to digital form and vice versa, maintain and update Demat accounts for accuracy, and facilitate seamless trading and investing.

Advantages Of Depository Participant

An important benefit of a depository participant is that it gives investors quick and easy access to depository services. By serving as an intermediary, a depository participant makes it easier for investors to open accounts, dematerialize securities, invest, trade, and access other related services. 

Working with a depository participant comes with various benefits:

  • Seamless Transactions: With a DP, investors gain easy access to the depository system, ensuring seamless transactions.
  • Efficiency: DPs enable quick transaction processing, saving investors valuable time.
  • Enhanced Security: DPs mitigate the risks associated with physical share certificates, such as theft, forgery, or damage, by maintaining securities in an electronic format.

Best Depository Participant in India

Although there are a number of depository participants in India, Alice blue, with its superior platform and dedicated customer service, stands out as the depository participant in India. With Alice Blue’s 15 Rs brokerage plan, you can save more than ₹ 1100 brokerage every month. They don’t levy clearing charges. Alice Blue can also help you invest in IPO, stocks, and mutual funds for free.

How to Open a Demat account with Alice Blue?

Opening a Demat account with Alice Blue involves a few straightforward steps:

  1. Visit the Alice Blue website and click on ‘Open an Account.’
  2. Fill in the online application form with your personal and financial details.
  3. Submit the necessary Know Your Customer (KYC) documents, including proof of identity and address.
  4. Once your application and KYC documents are verified, you will receive your account details via email.

Note- Do not forget that a demat account with a reputable DP, such as Alice Blue, is your ticket into the securities market.

Want to know more about how to open an account with Alice Blue – Check out our blog.

We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, and hence we bring you the important topics and areas that you should know:

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Depository Participant – Quick Summary

  • Depository Participant (DP) is an agent of the depository that links the depository with the investor.
  • DPs facilitate trading and investing, including dematerialization, rematerialization, and maintenance of Demat accounts.
  • There is a distinct difference between a depository and a depository participant; the former holds securities electronically, while the latter enables investors to interact with the depository.
  • DPs offer benefits such as smooth transactions, efficiency, and enhanced security.
  • Alice Blue stands out as a unique DPs in India, charging low brokerage fees of just ₹ 15.
  • Opening a Demat account with Alice Blue is a simple process, requiring an online application, submission of KYC documents, and subsequent verification.

Depository Participant Means – FAQs

1. What Is a Depository Participant?

A depository participant is a middleman between the depository and the investor who helps with securities transactions, such as investments, trades, dematerialization, and rematerialization, and keeps Demat accounts up to date.

2. What is an example of a depository?

Depositories in India include Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL). They keep electronic copies of investors’ shares, bonds, and mutual funds.

3. What is the difference between broker and DP?

The main distinction between a broker and a depository participant is that a broker is a member of a stock exchange who buys and sells securities on behalf of investors, while a depository participant is an agent of a depository that enables investors to hold and transact securities in dematerialized form.

4. Who is a depository participant in Demat account?

A depository participant in a Demat account could be a bank, a broker, or a financial institution authorized to offer Demat services to investors. Alice Blue, for example, is a Depository Participant offering Demat services to its customers.

5. Is CDSL a depository participant?

No, CDSL (Central Depository Services Limited) is a depository, not a depository participant. It holds securities in electronic form, while depository participants are intermediaries between depositories like CDSL and investors.

6. Who takes DP charges?

DP charges are levied by the Depository Participant. For instance, if you have a Demat account with Alice Blue, it would be Alice Blue that levies the DP charges.

7. Who can be eligible to become DP?

Financial organizations such as banks, brokers, and custodians can become depository participants. They need to be registered with SEBI and comply with the regulations of the depositories, i.e., NSDL or CDSL.

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