Any transaction involving delivery of securities to a clearing corporation / Clearing House for sale of securities done on a stock exchange platform is termed as ‘On Market’ transaction. Off Market, the transaction is one which is settled directly between two persons where Clearing Corporation / Clearing House is not involved. So, when do you use an on market transaction and when do you use an off-market transfer in DP?
Normally, when you buy or sell shares, they go through the clearing corporation. You give shares to the Broker CM account and from there it goes to the clearing member and then to the final client DP account. Since these transactions are routed through a clearinghouse, they are an on-market transaction. Off market transfers are not routed through the clearinghouse. If you want to transfer to your relatives or to your friends or if you want to transfer shares from your one account to another account to consolidate your holdings, they can be marked as off-market transactions. When you make the transfer of shares, mark them specifically as an off-market transaction so that it does not go through the clearinghouse.