Dematerialization (securities)

Okay kiddo, let me explain to you what dematerialization of securities means. When a company wants to raise money, it can do so by selling small portions of itself, called securities, to people like you and me. And previously, these securities were represented by physical certificates, like a piece of paper that we could hold in our hands.

But now, with dematerialization, these certificates are no longer needed. Instead, the ownership of these securities is recorded electronically in a computer system, which is called a depository. This means that we don't have to worry about losing our certificates or having them stolen.

So, if you decide to buy some securities from a company, the ownership of those securities will be reflected in the depository's computer system. You can access this information anytime by logging into your account.

This process is similar to how money is kept in a bank. You don't have to physically hold on to all your money, instead it is kept in the bank's system and you can access it through ATM or by logging into your bank account.

Overall, dematerialization of securities makes it easier and safer for people to invest in companies and keep track of their investments.