Registrar and Transfer Agents

'Registrar And Transfer Agents'
Registrar are the trusts or institutions that register and maintain detailed records of the transactions
of investors for the convenience of mutual fund houses.
Definition: Registrar or transfer agents are the trusts or institutions that register and maintain
detailed records of the transactions of investors for the convenience of mutual fund houses.
Description: Investors' transactions like buying, exchanges, processing of mails and related
information, changes in personal data, etc occur frequently and have to be recorded. Registrar &
transfer agents have skilled expertise for maintenance of such data on a professional basis, thereby
contributing to saving costs and time involved in keeping detailed accurate records of the investor
transactions.
Their role also extends to providing information to the investors about new offers, maturity dates and
all other investor-friendly information at one place for their reference. Some of the RTAs operating in
India are Computer Age Management Services (CAMS), Karvy, and Deutsche Investor Services,
among others.
Depositories
The role of Depository and Depository Participants in electronic trading
and settlement (DP)
A depository can be defined as an institution where the investors can keep their
financial assets such as equities, bonds, mutual fund units etc in the dematerialised
form and transactions could be effected on it. In India, there are two depositories
namely, the
National Securities Depository Limited(NSDL) promoted primarily by IDBI, the

Unit Trust of India and the National Stock Exchange, and the
Central Depository promoted by the Stock Exchange, Mumbai.
Besides providing custodial facilities and dematerialisation, depositories are offering

various transactional services to its clients to effect buying, selling, transfer of
shares etc. Through a system of paperless securities, depositories have made the
going easier to other institutions as well such as Stock Exchanges and its clearing
houses, stock broking firms, equity issuing companies, share transfer agents etc.
Basic Services
Basic services of a depository includes maintenance of accounts of investors,
dematerialisation and rematerialisation of shares, settlement of market transaction
through the release and receipt of securities in the investor's account ,off market
transfers,inter-depository transfers, distribution of non-financial benefits from
corporates to its shareholders, nomination facilities, transmission of shares,
hypothecation of dematerialised securities for a bank loan, freezing of account to
protect one's holdings when he is temporarily out of the scene etc.
Depository System: How it works

A depository system carries out its activities through various associates that include
depository participants (DP), issuing companies and their share transfer agents,
clearing corporation of Stock Exchanges etc. The depository is electronically linked
to each of these business partners via satellite links or through leased lines.
The Depository is electronically linked to DPs, clearing houses of Stock Exchanges,
corporates and share transfer agents that are registered under the depository to
avail its services etc through VSAT. This integrated system including the electronic
links as stated above and the software at NSDL and each business partners end is
called the National Electronic Settlement and Transfer System(NEST)
Custodian
WHAT IT IS:
A custodian is an institution or individual that can act as an
agent and exercise legal authority over the financial assets of
another individual or company.
HOW IT WORKS (EXAMPLE):
A custodian typically handles a variety of activities, including
physically holding equities and bonds, settling purchases
and sales, reporting the status of assets, tax compliance and
reporting, and management of the client's accounts and
transactions.
For example, a bank may act as a custodian for a
customer's investment activities, moving funds into brokerage
accounts, researching investment alternatives such as companies
and funds which might be appropriate investment targets,
instructing brokers to buy or sell securities, monitoring the
investment activities within the account, and reporting account
activity to the owner. The custodian may also prepare the
necessary tax filings on behalf of the owner, based on the
activities within the account.
Custodians may be appointed to hold control of assets of a minor
or an incapacitated adult. An adult with legal status may act as
the custodian for the accounts of a minor. For example, a common

tax strategy is to give a financial gift to a minor when their tax
rate is lowest. Under the Uniform Transfers to Minors Act (UTMA),
an adult or parent establishes the account on behalf of the minor
and serves as custodian, maintaining the legal authority and
direction over the custodial account. When the minor becomes
an adult, the custodian relinquishes his or her authority over the
account.
The custodian role is often held by banks, law firms,
or accounting firms which usually carry additional fees for the
services.
WHY IT MATTERS:
Custodian services are generally useful for absentee owners (i.e.
owners who are not interested or able to be involved in the dayto-day management activities of their accounts), as well as
complex transactions, management of substantial assets, timely
reporting and compliance, and tax management strategies.
Difference between Depository and Custodian
Custodians are involved in having the custody of securities/
shares. Depositories are the ones who not only have the custody
of the securities but also have legal ownership of those
securities. Custodians do not have legal ownership of securities.
To understand this further, if a custodian A transfers securities to
custodian B and for those securities the Depository is X, then at
depository level, the total amount of securities remains same
(depository will just change legal ownership) but at Custodian
level, custodian A will see a reduction in number of securities
while custodian B will see an increase in number of securities.
In a nutshell, custody is a function of depository and so each
depository is a custodian, but custodian is not a depository.
* Custodian = custody only
* Depositary = custody (frequent delegation) + control and legal

ownership of securities
STOCK BROKER -EXPLAINED
A stockbroker is an individual / organization who are specially
given license to participate in the securities market on behalf of
clients. The stockbroker has the role of an agent. When the
Stockbroker acts as agent for the buyers and sellers of securities,
a commission is charged for this service.
As an agent the stock broker is merely performing a service for
the investor. This means that the broker will buy for the buyer and
sell for the seller, each time making sure that the best price is
obtained for the client.
An investor should regard the stockbroker as one who provides
valuable service and information to assist in making the correct
investment decision. They are adequately qualified to provide
answers to a number of questions that the investor might need
answers to and to assist in participating in the regional market.
Are they governed by any Rules and Regulations?
Of course, yes. Stock brokers are governed by SEBI Act, 1992,
Securities Contracts (Regulation) Act, 1956, Securities and
Exchange Board of India [SEBI (Stock brokers and Sub brokers)
Rules and Regulations, 1992], Rules, Regulations and Bye laws of
stock exchange of which he is a member as well as various
directives of SEBI and stock exchange issued from time to
time. Every stock broker is required to be a member of a stock
exchange as well as registered with SEBI. Examine the SEBI
registration number and other relevant details can be found out
from the registration certificate issued by SEBI.
How do I know whether a broker is registered or not?
Every broker displays registration details on their website and on

all the official documents. You can confirm the registration details
on SEBI website. The SEBI website provides the details of all
registered brokers. A brokers registration number begins with the
letters INB and that of a sub broker with the letters INS.
What are the documents to be signed with stock broker?
Before start of trading with a stock broker, you are required to
furnish your details such as name, address, proof of address, etc.
and execute a broker client agreement. You are also entitled to a
document called Risk Disclosure Document, which would give
you a fair idea about the risks associated with securities market.
You need to go through all these documents carefully.
SUB BROKERS
According to the BSE website Sub-broker means any person
not being a member of a Stock Exchange who acts on behalf of a
member-broker as an agent or otherwise for assisting the
investors in buying, selling or dealing in securities through such
member-brokers.
All Sub-brokers are required to obtain a Certificate of Registration
from SEBI without which they are not permitted to deal in
securities. SEBI has directed that no broker shall deal with a
person who is acting as a sub-broker unless he is registered with
SEBI and it shall be the responsibility of the member-broker to
ensure that his clients are not acting in the capacity of a subbroker unless they are registered with SEBI as a sub-broker.
It is mandatory for member-brokers to enter into an agreement
with all the sub-brokers. The agreement lays down the rights and
responsibilities of member-brokers as well as sub-brokers.
STOCK BROKERS IN INDIA.
There are a number of broking houses all over India. Many of

them have International presence too. Following are some of the
leading Stock Broking firms in India.
IndiaInfoline
ICICIdirect
Share khan
India bulls
Geojit Securities
HDFC
Reliance Money
Religare
Angel Broking
Who are Primary Dealers (PDs)?
Primary dealers are registered entities with the RBI who have the license to purchase and
sell government securities. They are entities who buys government securities directly from
the RBI (the RBI issues government securities on behalf of the government), aiming to resell
them to other buyers. In this way, the Primary Dealers create a market for government
securities.
The Primary Dealers system in the government securities market was introduced by the RBI
in 1995.
The PDs are thus created to promote transactions in government securities market. A
facilitating arrangement is essential for selling of government securities as government is the
single largest borrower in the market who borrows through the issue of its securities
treasury bills and bonds.

The RBI instructs PDs to have a minimum turnover ratio, bidding ratio, underwriting ratio,
secondary market participation etc to ensure that they are active in supporting the trade in
government securities. PDs are active in the stock market also for enhancing the trading of
government securities.
Eligibility Conditions for PDs

a. Subsidiary of scheduled commercial bank/s and All India Financial Institutions
b. Subsidiaries/ joint ventures set up in India by entities incorporated abroad.
c. Company incorporated under the Companies Act, 1956 and does not fall under (a) or (b).
The applicant for PD should register as an NBFC for at least one year prior to the submission
of application. Other conditions like net owned fund etc are mentioned by the RBI.
The decision to authorize PDs will be taken by RBI based on its perception of market needs,
suitability of the applicant and the likely value addition to the system. Some other functions
besides trading in government securities are also assigned to them.
Role and Functions of Primary Dealers

The role of Primary Dealers is to:
(i) commit participation as Principals in Government of India issues through bidding in
auctions
(ii) provide underwriting services
(iii) offer firm buy - sell / bid ask quotes for T-Bills & dated securities
(v) Development of Secondary Debt Market
PDs are performing an exceptional role in giving marketability to government securities. the
RBI has elaborated the role of PDs in the following words PDs are expected to play an
active role in the G-Sec market, both in its primary and secondary market segments through
various obligations like participating in Primary auction, market making in G-Sec,
predominance of investment in G-Sec, achieving minimum secondary market turnover ratio,
maintaining efficient internal control system for fair conduct of business etc. A PD is required
to have a standing arrangement with RBI based on the execution of an undertaking and the
authorization letter issued by RBI every three years. Undertaking will be based on passing of
a fresh Board resolution by the PD every three years.

As on January 2015, there was 21 Primary Dealers in the country. Most of the PDs are
started by scheduled commercial banks and are registered as NBFCs. Operations of the
PDs are subject to prudential and regulatory guidelines issued by RBI from time to time.

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Registrar and Transfer Agents

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'Registrar And Transfer Agents'

National Securities Depository Limited(NSDL) promoted primarily by IDBI, the

Besides providing custodial facilities and dematerialisation, depositories are offering

Depository System: How it works

the custodian for the accounts of a minor. For example, a common

* Depositary = custody (frequent delegation) + control and legal

Every broker displays registration details on their website and on

There are a number of broking houses all over India. Many of

Who are Primary Dealers (PDs)?

treasury bills and bonds.

Eligibility Conditions for PDs

b. Subsidiaries/ joint ventures set up in India by entities incorporated abroad.

Role and Functions of Primary Dealers

(i) commit participation as Principals in Government of India issues through bidding in

(v) Development of Secondary Debt Market

a fresh Board resolution by the PD every three years.

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