DP-ID
Also written Depository Participant Identification Number
The unique identification number a depository issues to a Depository Participant once its system connectivity is activated in the live environment, allowing it to start functioning.
In plain language
Before a DP can open a single client account, the depository has to identify it in the system. That identification has a number of its own.
Once SEBI has granted registration, and the DP has completed its hardware, connectivity and training requirements, the depository activates the DP's application system in a live environment. At that point, a DP-ID is issued.
Only after receiving its DP-ID can the DP actually start functioning.
How it works
A DP-ID is generated as the last step of commencement of operations, described in Chapter 3, section 3.1.5. The sequence runs: application to the depository; approval and connectivity setup, by V-Sat, leased line or internet, with a fall-back link; in-depth training of at least one officer; hardware procurement and a pilot test; signing the DP-depository agreement in the Bye-Laws' prescribed format; and, finally, activation of the application system in the live environment at the DP's office, at which point the depository issues the DP-ID.
Every client account a DP opens sits under that DP-ID, and the DP-ID combines with a Client-ID the DP itself assigns to identify a specific beneficial owner account uniquely within the depository system. For a clearing member account, the identifier used instead is the CM-BP-ID, allotted by the depository once the clearing member has registered with the relevant Clearing Corporation.
A worked example
Suvidha Securities completes SEBI registration as a DP, sets up its leased-line connectivity, trains two officers, passes its pilot test with NSDL, and signs its DP-depository agreement. NSDL then activates its system in the live environment and issues it a DP-ID, say IN300XXX.
From that point, when Suvidha Securities opens a demat account for Mrs Nair, the depository system assigns her a Client-ID under that same DP-ID, forming her full account identifier — the DP-ID identifies Suvidha Securities as the DP across the whole depository system, while the Client-ID identifies Mrs Nair specifically within Suvidha Securities' book of clients.
Why NISM asks about it
Chapter 3, section 3.1.5 (Commencement of Operations), places DP-ID issuance as the final numbered step before "the DP can start functioning". Chapter 4's discussion of account identification then builds directly on it, pairing DP-ID with Client-ID for a beneficiary account, and introducing CM-BP-ID as the parallel identifier for a clearing member account.
Expect a question on what triggers issuance of a DP-ID — activation of the application system in the live environment — and on how a DP-ID and a Client-ID together identify a specific account.
Common exam traps
- DP-ID identifies the Depository Participant; Client-ID identifies the individual account within that DP. The two combine to identify one beneficial owner's account uniquely.
- DP-ID is issued only after live-environment activation — the last of several sequential steps in commencement of operations, not something issued alongside the certificate of registration itself.
- CM-BP-ID is the parallel identifier for a clearing member account, allotted by the depository once the clearing member has its Clearing Corporation registration in hand — a related but distinct number from DP-ID.
Check yourself
1.Before coming out with a public offer, the issuer is required to enter into an agreement with:
- a)All the depositories
- b)Its depository participants
- c)The investors
- d)SEBI
Show the answer
Answer: (a) All the depositories
Issuer shall be required to enter into an agreement with all the depositories.
Note "all" — not one of its choosing. An investor may hold his demat account with either depository, so the issuer must be connected to both.
The two other SEBI guidelines for public issues in electronic mode:
In case of Public issues for Equity allotment is mandatory in demat form. In case of debt securities, Issuer shall give an option to subscriber/investor to receive the physical certificates or hold the securities in electronic mode with the depository.
In order to eliminate the risks to investors on account of fake/forged certificates, bad deliveries, delays in transfer, etc., trading in securities of company making an IPO shall be in demat form only.
The statutory threshold: according to the Companies Act, 2013 every listed public company, making an initial offer of any security of Rs. 10 crore and above has to issue it only in dematerialised form in accordance with Depositories Act, 1996. And the SEBI guidelines require that all public issues of the size of Rupees ten crores and above be compulsorily made in demat form.
What the investor must supply on the form: Depository Name · DP's Name · DP-ID · Beneficiary Account Number (BO ID).
And the process is neutral and free: there are no charges for the allotment process. All the applications, whether with demat option or not, are treated alike for allotment purposes.
2.A demat account number consists of:
- a)A 10-digit client ID only
- b)8-digit DP-ID plus 8-digit client account number, 16 digits in all
- c)12-digit ISIN plus 4-digit client code
- d)A 20-character alphanumeric code
Show the answer
Answer: (b) 8-digit DP-ID plus 8-digit client account number, 16 digits in all
In case of CDSL, the account number has two parts, i.e., 8-digit DP-ID (identification number of Depository Participant) and 8-digit client account number. The workbook's example: 13015600 00000082.
Similarly, an account with the NSDL will have 16-digit number with the first 8 digits indicating the DP-ID starting with IN300100 and the last 8 digits giving the client id i.e. 10005678.
Both depositories therefore use 16 characters; the NSDL DP-ID begins with "IN". Together this number is unique across depositories.
Option D describes the LEI — a 20 character alpha numeric code used to identify parties for Large Value Transactions i.e. for value of transaction ₹50 crore and above.
Option C confuses the ISIN, which identifies a security rather than an account.
How the number is generated: on receipt of a valid application form which is complete in all respects and duly signed by the applicant, the DP should verify its contents to his satisfaction. If, after verification, the DP accepts the application and the Rights and Obligations document is signed, the DP has to enter the information on the application form into the depository participant system. The system then generates a client account number which should be referenced by the client for all its transactions.
And what follows: the DP should provide a copy of account opening confirmation report to the client for his reference and verification about the correctness of details, and after opening the demat account, the client master report should be sent to the client at the address given in the account opening form.
One more identifier worth distinguishing: the VID is a 16-digit numeric field which can be used by Aadhaar holder in lieu of his/her Aadhaar number.
Where this is taught
Free preparation for NISM Series VIRelated terms
- Certificate of registrationThe SEBI registration without which a depository cannot deal in securities, no entity may act as a DP, and no FPI may invest. It is valid unless SEBI suspends or cancels it.
- Depository participantThe SEBI-registered agent through whom an investor reaches a depository — NSDL and CDSL cannot open investor accounts themselves, so every demat account is opened and operated through a DP.
- CM-BP-IDThe identification number NSDL allots to a clearing member's settlement account, combining with the Clearing Corporation's CC-CM-ID and the DP's Client-ID to identify the account uniquely.
- Bid-cum-Application formThe completed form an investor submits to a Depository Participant to subscribe to a public issue, which the DP acknowledges and then uploads into the stock exchanges' electronic bidding system.