Bangalore university

Administrative Management College

18th km, Bannerghatta Road, Bangalore -560083

Class: 2nd B.COM ( 3RD SEM )

Subject: Indian Financial Services ( IFS )
Topic: Stock Exchange Operations ( Settlement , Custody ,Nsdl & Cdsl )

To:
Mr. Lakshmi Pathi Sir
( Assistant Professor )
STOCK MARKET
OPERATIONS
01 SETTLEMENT
02 CUSTODY
03 NSDL & CDSL
01 Settlement 1. Meaning

2. Types

3. process

4. violations
SETTLEMENT

Meaning –
where the shares are moved from the seller's account to the buyer's account and the money is moved from the
buyer to the seller.

Types –
1. Spot settlement – This is when the settlement is done immediately following the rollingsettlement
principle of T+2.
2. Forward settlement – This happens when you agree to settle the trade at a future date which could be
T +5 or T+7.

Process -
Mentioned below are the steps of settlement by the Bombay Stock Exchange:
▪ The shares on the Bombay Stock Exchange (BSE) are all settled in T+2 days.
▪ T+2 days are also used to close government securities and fixed income instruments for individual inve
stors.
▪ When you buy or sell securities, you pay in and out on the same day of the trade.
▪ After the BSE completes the pay-out of monies and securities, the client deposits the securities within one
working day.

Violations -
Stock settlement violations occur when new trades to buy are not properly covered by settled funds.
Although settlement violations generally occur in cash accounts, they can also occur in margin accounts, pa
rticularly when trading non-marginable securities.
02 Custody 1. Meaning

2. Custodian

3. Key Takeaways
CUSTODY

Meaning –
custody can be defined as "a safekeeping service that a financial institution provides for
a customer's securities. For a fee, the institution collects dividends, interest, and proceeds from
security sales and disburses funds according to the customer's written instructions.”
Custodians –
who hold responsibility for assets in custody have existed for millennia, since the first money le
nders in the temples of early civilisations took deposits of gold minas and shekels from passing
merchants.

KEY TAKEAWAYS -
▪ A custodian bank holds financial assets for safekeeping to minimize the risk of theft or loss.
▪ Investment advisors are required to arrange for a custodian for assets they manage for their
clients.
▪ These assets may be stored in physical or electronic form.
▪ Custodian banks can also manage financial accounts, handle settlements, and deal with
compliance and tax issues.
▪ Custodian banks can serve as mutual fund custodians.
03 NSDL & CDSL
NSDL & CDSL

Meaning -
NSDL and CDSL are share depositories that hold the shares of millions of stock
market investors in an electronic form.
NSDL stands for National Securities Depositories Limited
CDSL stands for Central Depositories Services Limited
Function of NSDL and CDSL -
Both CDSL and NSDL function as depositories. This means they are administrative
bodies holding securities, financial instruments, and stocks of investment in a dematerialized or
electronic form. Through the means of their DP or depository participant, an investor can place
a request to either depository. In general, both CDSL and NSDL work like banks for investors.
Role of CDSL -
CDSL was set up with the objective of providing convenient, dependable and secure depository serv
ices at affordable cost to all market participants.
Role of NSDL -
NSDL aims at ensuring the safety and soundness of Indian marketplaces by developing settlement s
olutions that increase efficiency, minimize risk and reduce costs.
NSDL & CDSL

Difference Between NSDL & CSDL -

Sr. No. Particulars NSDL CDSL

National Securities Depo Central Depositories Serv

1. Abbreviation
sitory Ltd. ices Ltd.

2. Stock exchange National Stock Exchange Bombay Stock Exchange

3. Establishment year 1996 1999

Number of depository pa
4. 278** 599*
rticipants registered

5. Investor Accounts 1.95 crore** 2.11 crore*

16-digit alpha numeric n

Demat account number f umber. Account number 16-digit demat account n
6.
ormat begins with ‘IN’ followed umber
by 14 numeric digits

**- As on February 29, 2020 *- As on March 31, 2020

NSDL & CDSL

Conclusion -
In essence, neither NSDL nor CDSL matters when you want to invest in the
capital market – what matters is your broker. Choosing the right broker is essential to
profit from the stock market. The best broker charges lower-than-average fees and
maximises your profits
THANK YOU
By : Divya shree
Sahana
Navya
Sanjana
Sharanya