Dematerialization: Physical securities are converted into electronic form. Benefits are Lower costs, lower risks of theft or forgery and efficiency in settlement of trades.
Fungibility: Securities held in a depository are fungible. No Folio or distinctive or Certificate numbers for Dematerialized Sec. All securities in the same class are identical and interchangeable.
Depository - Registered Owner in the books of the issuer and Investor - Beneficial Owner.
The Depositories offer their services to the investors through their agents called Depository Participants. The DPs are appointed under the SEBI (Depositories and Participants) Regulations.
The Depository System : The Depositories Act, 1996, defines a depository as "a company formed and registered under the Companies Act and which has been granted a certificate of registration under sub-section (IA) of section 12 of the Securities and Exchange Board of India Act, 1992.
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