Password User
Also written Password User (SPEED-e)
A SPEED-e access mode that lets a demat account holder submit delivery instructions online but only to a maximum of six pre-notified Clearing Member accounts, unlike a Smart Card/e-Token user who faces no such cap.
In plain language
NSDL's SPEED-e facility lets demat account holders submit delivery instructions over the internet instead of on paper. There are two ways to access it, and they are not equally powerful.
A Password User logs in with a password. A Smart Card / e-Token User authenticates with hardware — and only a Smart Card/e-Token User can act as a Clearing Member on SPEED-e. The difference that actually matters to an ordinary investor is a cap: a Password User can debit the demat account only in favour of specified Pre-Notified Clearing Member accounts, and only up to six of them.
How it works
From Chapter 5, section 5.3.2: NSDL launched SPEED-e ("pronounced as speedy") in September 2001. Any NSDL DP can subscribe, and its Users sign an agreement with the DP.
A demat account holder accesses SPEED-e either as a Password User or as a Smart Card / e-Token User. A Clearing Member must be a Smart Card/e-Token User to access SPEED-e at all. Password Users can debit their demat accounts only in favour of specified Pre-Notified Clearing Member accounts, up to six, while a Smart Card/e-Token User can submit instructions in favour of any number of accounts, and can also freeze or unfreeze the account through SPEED-e.
Features added for both user types include a facility to reset passwords by keying in a few parameters on the SPEED-e website, and (through SIMPLE) submitting Client-to-Clearing-Member-Pool-Account transfer instructions from a mobile phone.
A worked example
Mr Bhatia registers as a Password User on SPEED-e to submit delivery instructions online. He pre-notifies 5 Clearing Member accounts to his DP — within the permitted maximum of 6.
He can submit online delivery instructions debiting his demat account only in favour of those 5 accounts. If he wants to deliver securities to a 6th pre-notified account, he still can, since he is within the cap — but if he tried to add a 7th, it would exceed the Password User limit.
His brother-in-law, registered as a Smart Card User, faces no such cap: he can give instructions in favour of any number of CM accounts, and can freeze or unfreeze his own account directly through SPEED-e — facilities not available to a Password User.
Why NISM asks about it
Chapter 5, section 5.3.2, sets out SPEED-e's two access modes as part of the DP-operations toolkit. Expect a question on the cap of six Pre-Notified Clearing Member accounts for a Password User, and on the fact that a Clearing Member must specifically be a Smart Card/e-Token User, not a Password User, to access SPEED-e.
Common exam traps
- The Password User cap is six Pre-Notified Clearing Member accounts — a Smart Card/e-Token User has no such limit.
- Only a Smart Card/e-Token User can act as a Clearing Member on SPEED-e — a Password User cannot.
- Freezing/unfreezing the account through SPEED-e is a Smart Card User facility, not available to a Password User.
- SPEED-e is an NSDL facility, launched in September 2001 — CDSL's equivalent internet facilities are easi and easiest, described separately.
Check yourself
1.A Password User of SPEED-e can debit his demat account:
- a)In favour of any account
- b)Only in favour of specified Pre-Notified Clearing Member accounts, up to six
- c)Only in favour of accounts held with the same DP
- d)Not at all — password users can only view
Show the answer
Answer: (b) Only in favour of specified Pre-Notified Clearing Member accounts, up to six
Password Users can debit their demat accounts only in favour of specified Pre-Notified Clearing Member accounts (upto six), while Smart Card/e-Token User can submit instructions in favour of any number of accounts.
Option A describes the Smart Card/e-Token user. Option D confuses SPEED-e with IDeAS — SPEED-e is the instruction facility; IDeAS is the facility for viewing.
The credential also determines who may use it at all: a demat account holder will have the option of accessing SPEED-e either as a Password User or as a Smart Card/e-Token User. A Clearing Member must be a Smart Card/e-Token User to be able to access SPEED-e.
And one function is reserved for the stronger credential: as a smart card user, clients can also freeze or unfreeze their accounts by giving instructions through SPEED-e.
Both classes of user share some features: the launch of redemption of mutual fund units through SPEED-e facility... enable both type of users viz., password and e-Token users to give request to redeem the mutual fund units.
And password users have their own facility: SIMPLE, a facility that enables the password based users of SPEED-e facility to submit Client to Clearing Member Pool Account transfer instructions, on SPEED-e website through their mobile phones (enabled with GPRS).
Background: NSDL launched SPEED-e (pronounced as speedy) in September, 2001. Any DP of NSDL can subscribe to SPEED-e, the common infrastructure of NSDL. SPEED-e is available only to those DPs who have subscribed to it.
Where this is taught
Free preparation for NISM Series VIRelated terms
- Delivery Instruction SlipThe signed form on which a beneficial owner instructs the DP to debit the demat account — no beneficiary account can be debited without one, whether the transfer is on-market or off-market.
- 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.
- Clearing member accountThe special demat account a broker or custodian opens to settle exchange trades, through which clients' sold shares go to the clearing corporation and bought shares arrive; also called the pool account.
- Smart Card / e-Token UserThe hardware-authenticated way of accessing NSDL's SPEED-e facility, required for any Clearing Member and carrying no cap on the number of accounts an ordinary user can instruct.
- SPEED-eNSDL's internet-based facility, launched in September 2001, letting demat account holders and Clearing Members submit delivery instructions directly online instead of on paper.
- SIMPLENSDL's facility letting a password-based SPEED-e user submit a Client-to-Clearing-Member Pool Account transfer instruction from a GPRS-enabled mobile phone.