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.