Explain the need for, and role of depository systems in secondary markets. Explain the concept of custodial services.

Need for and Role of Depository Systems in Secondary Markets:

Depository systems play a crucial role in secondary markets by providing a safe, efficient, and cost-effective way for investors to hold, transfer, and settle securities electronically. In traditional securities trading, physical certificates were used, which posed several challenges such as the risk of loss, theft, fraud, and delays in settlement. Depository systems address these issues and offer several benefits:

1. Elimination of Physical Certificates: Depository systems facilitate the dematerialization of securities, converting physical certificates into electronic form. This eliminates the risk of loss or damage to certificates and streamlines the trading process.

2. Efficient Settlement: Depositories enable seamless and __________ ______ _________ ____ ______ ______ ___.
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