"A depository interfaces with the investors through its agents called Depository Participants". Discuss the statement and explain the characteristics of depository participants and how depository is different from custod

A depository interfaces with the investors through its agents called Depository Participants (DPs). If an investor wants to avail the services offered by the depository, the investor has to open an account with a DP. Just as a brokers act an agent of the investor at the Stock Exchange, a Depository Participant (DP) is the representative (agent) of the investor in the depository system providing the link between the Company and investor through the Depository. The Depository Participant maintains securities' account balances and intimates the status of holding to the account holder from time to time. Characteristics of a DP Transmission requests/nomination Acts as an Agent of Depository Customer interface of Depository Functions like Securities Bank Account opening Facilitates dematerialisation/rematerialisation Instant transfer on pay-out Enables off market transfers Settles trades in electronic segment Pledge/enforcement of pledge etc. A DP is one with whom an investor needs to open an account to deal in shares in electronic form. While the Depository can be compared to a Bank, DP is like a branch of that bank with which an account can be opened. Both depository and custodian services are responsible for safe keeping of securities but they are different in the sense that the Depository can legally transfer beneficial ownership, while a custodian cannot. The main objective of a Depository is to minimize the paper work involved with the ownership, trading and transfer of securities.