Stock Market Basics

Depository

An organization (NSDL or CDSL in India) that electronically holds and records your share ownership, separate from the stock exchange and your broker.

A depository is an institution that electronically holds securities (like shares) on behalf of investors, maintaining an accurate record of who owns what. India has two SEBI-regulated depositories: NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).

Why Depositories Exist

Before depositories, shares existed as physical paper certificates — slow, easy to lose, and prone to fraud. Depositories replaced this with a fully electronic system, where your shares are held in a Demat account linked to NSDL or CDSL through your broker.

Depository vs Exchange vs Broker

  • The exchange (NSE/BSE) is where the trade — the buy/sell matching — happens.
  • The depository (NSDL/CDSL) is where your shares are actually held and recorded after the trade.
  • The broker is the platform/app you use to place your order in the first place.

We cover Demat accounts and depositories in full detail in What Is a Demat and Trading Account?, and introduce the concept in How the Indian Stock Market Works: NSE, BSE, and SEBI Explained.