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ABSTRACT

The document discusses depository systems and pledging of securities. A depository system aims to eliminate paper-based trading and allows for paperless trading through technology. It maintains electronic records of security ownership. Pledging refers to when a lender has the unilateral right to claim pledged securities if the borrower defaults. The document outlines the objectives, requirements, and risks of pledging shares. It concludes that few investors currently use pledging due to the perceived risks and low amounts lent compared to the value of shares pledged.

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47 views1 page

ABSTRACT

The document discusses depository systems and pledging of securities. A depository system aims to eliminate paper-based trading and allows for paperless trading through technology. It maintains electronic records of security ownership. Pledging refers to when a lender has the unilateral right to claim pledged securities if the borrower defaults. The document outlines the objectives, requirements, and risks of pledging shares. It concludes that few investors currently use pledging due to the perceived risks and low amounts lent compared to the value of shares pledged.

Uploaded by

jashan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ABSTRACT

Pledging and Depositories

Depository system essentially aims at eliminating the voluminous and cumbersome paper work involved
in the scrip-based system and offers scope for 'paperless' trading through state-of-the-art technology. It is
an institution which maintains an electronic record of ownership or securities.

 Key features of the depository system:


 Benefits of depository system
 Players In The Depository System
 Services offered by Depository through Depository Participants

• Pledge: If the lender has unilateral right (without reference to borrower) to appropriate the securities
to his account if the borrower defaults or otherwise, the transaction is called a pledge.

 Objectives
 Conditions for pledging
 Features
 Documents Required
 Reasons for opting for pledging of shares by the promoters
 Reasons of Pledging of shares by general shareholders
 Guidelines for pledging
 Creation of Pledging
 Closure of Pledging
 Risk involved in pledging
 Price

• Conclusion: A generalized conclusion can be drawn that the investors availing the pledging facility
are less in number. Most of the people who don’t go for the facility of pledging, consider it a risky
process. Market risk is the factor, mainly considered for its risk. They also don’t avail this service because
they get less money against pledging. So, to make this service more attractive, proper steps should be
taken as corrective measure. So that majority of the investors can get benefit from this service.

KAVITA

Roll No. 5872

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