Ever since the COVID-19 pandemic, the popularity of Initial Public Offerings (IPOs) has risen as an investment tool. The simplification of applying for IPOs has also contributed to their increasing popularity. You can now subscribe to an IPO from the convenience of your home or office through an online share trading platform.
But even when you apply for an IPO online, you are required to fill out specific details in an IPO application form. One such detail that might confuse you is the “DP name”. Continue reading to understand the meaning of the DP name in an IPO application and why it is important.
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DP name refers to the name of the depository participant. To subscribe to an IPO, you must place your bet through a Demat account, which is linked to a trading account. While a Demat account is managed by the depository, a depository participant or DP manages the trading account. This depository participant and the depository together facilitate the share trading process.
The Securities and Exchange Board of India (SEBI) has authorised two depositories to manage investors' Demat accounts. These are the National Security Depository Limited (NSDL) and the Central Depository Services Limited (CDSL). When you wish to open a Demat account, you are required to approach a depository participant, which in turn, approaches one of the two depositories.
A depository participant acts as the link between an investor and the depository. Although a depository is responsible for opening and managing your Demat account(s), it cannot engage with you or the companies issuing the securities directly. That is why it needs a depository participant.
Depository participants are SEBI-registered entities that are also known as stockbrokers. Below are the primary functions of a depository participant:
Now that you know what a depository participant is and what its functions are, you can easily find your depository participant name or DP name. Simply put, it is the name of the stockbroker with whom you opened your Demat account. You are required to enter this name in the relevant space for “DP name” in an IPO application form.
You are also required to enter your DP ID and DP account number. The DP ID is an eight-digit alphanumeric ID assigned by the depository to your depository participant. The DP account number is a 16-digit alphameric ID that recognises your Demat account. The first eight digits of the DP account number are the DP ID, and the next eight digits constitute the client’s ID or Beneficiary Owner (BO) ID.
In case a Demat account is being run by the NSDL, the DP account number starts with “IN”. On the other hand, if the CDSL runs a Demat account, the DP account number starts with a numerical one.
If you apply for an IPO from your stockbroker’s platform, your DP name, ID, and DP account number will be filled out automatically.
Thanks to the internet and digitalisation, applying for an IPO has become pretty straightforward. You can simply log into your depository participant’s platform, select the number of lots you want to apply, and request through the Application Supported by Blocked Amount (ASBA) facility. Once your request is approved, the requisite amount will be blocked in your bank account, and your IPO application will be processed.
With Motilal Oswal, you can open a free Demat account from your home and invest seamlessly in IPOs.