The benefits from the depositary system are following:
- It reduces the cost of the issue and the transfer of securities by eliminating stamp duty.
- It reduces the scope of theft, forgery damages to securities certificates.
- It eliminates bad deliveries.
- It entitles the transferee to all the rights associated with the securities immediately on the settlement of purchase transaction.
- It enhances the liquidity of securities in the market.
- It makes faster disbursement of non-cash corporate benefits like rights, bonus, etc. possible.
- It reduces brokerage by many brokers for trading in dematerialized securities.
- It eliminates problems relating to change of address of investors, transmission etc.
- It eliminates problems relating to selling securities on behalf of a minor.