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Indian Stock Market >> Dematerialsation >> Trading and Settlement

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Trading and Settlement

What is the procedure for selling dematerialised securities?
The procedure for buying and selling dematerialised securities is similar to the procedure for buying and selling physical securities. The difference lies in the process of settlement of shares i.e. delivery (in case of sale) and receipt (in case of purchase) of securities.

Following procedure is followed for settlement:

In case of purchase:-

The broker will receive the securities in his account on the payout day from the clearing corporation of the stock exchange.

The broker will give instruction to its DP to debit his account and credit investor's account who has bough the shares.

Investor will give 'Receipt Instruction to DP for receiving credit by filling appropriate form. However one can also give standing instruction for credit of securities in his account, which is convenient way of receiving shares as that will obviate the need of giving Receipt Instruction every time.

In case of sale:-
The investor will give delivery instruction to DP to debit his account and credit the broker’s account with correct ISIN of the number of securities sold by him. Such instruction should reach the DP’s office at least 24 hours before the pay-in as other wise DP will accept the instruction only at the investor’s risk. DP will debit his account and credit the account of the broker through whom shares have been sold. The broker would then transfer the shares to the clearing corporation of the exchange where shares have been sold.

What is 'Standing Instruction' given in the account opening form?
In a bank account, credit to the account is given only when a 'pay in' slip is submitted together with cash/cheque. Similarly, in a depository account 'Receipt in' form has to be submitted to receive securities in the account. However, for the convenience of investors, facility of 'standing instruction' is given. If you say 'Yes' for standing instruction, you need not submit 'Receipt in' slip every time you buy securities. Hence all credits to your account would be automatically facilitated for your convenience.