PROCEDURE FOR SELLING AND BUYING OF SHARES Sell Dematerialized Shares Selling dematerialized shares in stock exchanges is similar

to the procedure for selling physical shares. Instead of delivering physical shares to the broker, you instruct your DP(depository participant ) to debit your account with the number of shares sold by you and credit your broker's clearing account. For this, a delivery instruction has to be given to your DP in a standardized format, which will be available with your DP. In short, for selling demat shares;

You can sell shares in any of the stock exchanges linked to a depository through a broker of your choice.

Give an instruction to your DP to debit your account and credit your broker's clearing member pool account. (this is a depository account used exclusively for settling transactions by a broker)

On the pay-in day, your broker gives instruction to his DP for delivery of the shares to clearing corporation of the relevant stock exchange.

The broker receives payment from the clearing corporation You receive payment from your broker for the sale in the same manner you would receive payment for a sale in the physical mode.

Buy Dematerialized Shares. When you want to purchase shares in electronic form, you have to instruct your broker to purchase the dematerialized shares from the stock exchanges linked to a depository. Once the order is executed, you have to instruct your DP (vide a simple format which is available with the DP) to receive securities from your broker's clearing account.

Alternatively, you may give a standing instruction to receive credits into your account and do away with giving a separate receipt instruction each time you expect a credit. You have to ensure that your broker too gives a matching instruction to his DP to transfer the shares purchased on your behalf into your depository account. You should also ensure that your broker transfers the shares purchased from his clearing account to your depository account, before the book closure. This is really important because shares that remain in the clearing account of the broker on the book closure/ record date will not be eligible for corporate benefits. In brief, the transactions relating to purchase of shares are:

You can purchase shares in any of the stock exchanges connected to a depository through a broker of your choice and make a payment to your broker;

Your broker receives credit in his clearing account with his DP on the pay-out day; Broker gives instructions to his DP to debit his clearing account and credit your account; You instruct your DP for receiving credit into your depository account either through a specific receipt instruction or using the "standing instruction" facility.

In case you are not using the "standing instruction" facility then, your depository account is credited only if the instructions given by you and your broker match.