Broker Guided Tour / Introduction
The introduction of electronic trading system and an increase in the reach of trading terminals has opened a large market for broking members. However, the physical form of holding and trading in securities acts as a bottleneck in fully exploiting this potential.
- The cost and time spent by the brokers for rectification of bad deliveries tends to be higher with the geographical spread of the clients.
- The increased trade volume leads to exponential rise in the back office operations, which limits the growth potential of the broking members.
- The inconvenience faced by investors in areas that are far flung and away from the main metros in settlement of trade also limits the opportunity for such investors, specially in participating in auction trading.
Establishment of NSDL facilitating 'scripless settlement' has removed these bottlenecks and improved market opportunities for the broking members. Some of the immediate benefits are:
- Elimination of the risk of being the introducing broker because once the securities are dematerialised, there is no possibility of the securities coming under "objection".
- Reduction in the back office cost of handling paper
- Reduction in funding cost for institutional trades because the pay in and pay out of securities and funds are on the afternoon and evening of the same day
Besides these benefits which are specific to brokers, there are several other advantages that make dealing in dematerialised securities more cost effective than dealing in physical securities.
NSDL deals only with settlement of securities. Settlement of funds for buy/sell transactions are carried through clearing banks. Therefore, this site does not mention anything about funds settlement process.