De-materialization and Re-materialization in Stock Investment


Dematerialization is the conversion of a share certificate from its physical form to its electronic form for the same number of holdings that has been credited to your dematerialization account that you opened via a participating depository. Dematerialization is a process by which the company takes over the physical share certificates of an investor and an equivalent number of securities is credited in electronic form to the depositary. The custodian is an organization where the securities of a shareholder are held in electronic form.

Re-materialization is a process by which a shareholder can recover their stake in the physical form of a share certificate. Advantages of dematerialization for investors: A secure and convenient way to hold securities. The custodian system reduces the risks associated with holding physical certificates, e.g. loss, theft, dismemberment, forgery, etc. It ensures the payment of transfers and reduces the time taken to register shares. It ensures faster communication with investors. It ensures faster payout on sales of shares. It offers more acceptability and liquidity of the securities.

Market correction is a process by which brokers attempt to correct the value of overvalued stocks. The stock market reacts to both fundamental news and rumors. Both of these factors can drive the stock price to an overvalued or undervalued level. When the market is grossly overvalued, there will be a problem, especially for those who have borrowed money to buy stocks. Overvalued stocks are stocks that have peaked for a period of time; they enter a phase of rest or, in most cases, begin to decline.

Source by Chijioke Paul

Comments are closed.