The role of a depository is not just limited to buying and selling of shares. It provides a lot more services to the investor. Here are a few samples. A Depository, through the DP, facilitates the opening a demat account. It allows you to dematerialize the shares i.e. converting physical securities into electronic form. Of course, you can also rematerialize your shares, i.e. converting electronic securities balances held in a BO account into physical form, although it is not exactly very useful these days. From a trading point of view also there are some important functions of a depository. It maintains a record of holdings in the electronic form and also facilitates settlement of trades by exchanges / Clearing corporations by delivering/receiving underlying securities from/in BO accounts.
Apart from your ownership and transaction support, the DP facilitates the transfer of securities between BOs. You can also receive electronic credit in respect of securities allotted by issuers under IPO or otherwise. Above all, you can also get direct credit of noncash corporate benefits such as allotment of bonus and rights shares or any other non-cash corporate benefits given by the issuers in electronic. Your DP also facilitates pledging of dematerialized securities. For safety, you DP also allows you to freeze debits and credits to your account especially if you are going to be traveling abroad for a long time.