Justify the following statement.
DP is an important constituent of Depository system.
- Depository Participant (DP) is the agent of depository. It is an intermediary appointed by depository.
- DP is registered under the SEBI Act. It enjoys rights and obligations as specified under SEBI (Depository and Participants) Regulations of 1996.
- DP acts as a link between depository and the investor.
- It directly deals with customers. It sends statement of accounts periodically.
- It functions like a securities bank. The DP maintains account of securities of each investor.
- It facilitates dematerialisation. It settles trade electronically.
- It credits securities in the event of rights issue, bonus issue, etc. It handles instant transfers of pay-outs like dividend, interest, etc.
- Thus, DP is an important constituent of depository system.
Concept: Constituents of Depository System
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