A depository is an entity which holds securities of investors in electronic form at the request of the investors through a registered Depository participant. It also provides services related to transactions in securities based on instructions given by the investors to depository participant.

How many Depositories are registered with SEBI?
At present two Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (I) Limited (CDSL) are registered with SEBI.

Who is a depository participant?
A depository participant is a person or entity, which is registered with depositories such as NSDL and/or CDSL as also with SEBI and who offers services of holding your shares and effecting transfer (accepting credits in your account as well transferring shares from your account to that of some one else based on your instructions). Thus a depository participant acts as a custodian of your securities held in dematerialized or fungible form and carries out your instruction to transfer the same.

Is it compulsory for every investor to open a depository account to trade in the capital market?
Around 99.9% of the securities settlement takes place in dematerialized mode. Therefore, in view of the convenience in settlement through dematerialized mode, it is advisable to have a beneficiary owner (BO) account to trade at the exchanges and to hold the securities.

How are transfers made by DP?
DPs issue Delivery Instruction Slips (or DIS) to all account holders. These are like cheque leaves. Whenever you want to transfer shares from your account to another account, you are required to fill the relevant details such as security identification number, number of shares you want to transfer, date of transfer, account to which shares need to be transferred etc. and submit this slip to your DP. The DP would then affect the transfer. You can give standing instructions to your DP for all credits to your account, whereby you need not give instructions to your DP each and every time for accepting credit to your account.

Stock Market Glossary
The settlement process where the buy and sale transactions done for a particular period (week or fortnight) are aggregated and only the net obligations are settled after the period is over. Indian securities market had weekly account period settlement before rolling settlement.

Allotment:
A letter sent to the successful application about allotment of shares/debentures against his application.
American Depository Receipts (ADRs):
A certificate issued in the United States in lieu of foreign security. ADRs are traded in US markets for all intents and purposes.

American option:
A put or call option that cane be exercised any time before the expiration date.

Asset Management Company:
The company that handles day to day management and operations of a Mutual Fund.

Arbitrage
The process of benefiting out of price differential in the same scrip between two markets or because of price difference in the scrip in the underlying market and futures or derivative markets.
Arbitration:
Settlement of claims differences or disputes between member of a stock exchange and another member and between a member and his clients, sub-brokers, etc., through appointed arbitrators. It is a quasi-judicial process that is faster and an inexpensive way of resolving a dispute. The stock exchange facilitates the process of arbitration between the members and their clients in accordance with the bye-laws of the exchange.

Ask
The price which the seller of the security wants to sell the shares owned by him.

Auction:
An auction is a mechanism utilized by the stock exchange to fulfill its obligation to a counter party member when a member fails to deliver agreed securities or make the payment. Through auction, the stock exchange arranges to buy good securities and deliver them to the buying broker or arranges to realise the cash and pay it to the selling broker