InfoTech IMS solution is a complete Clearing, Settlement and Depository system able to cater the entire Depository and Clearing functions of an Exchange. The database is designed in a fashion, where both the systems i.e. Clearing & Settlement and Depository can be run by a single entity on the same server or by different entities on different servers, where the physical location of both is also different.

It has been designed to couple with the trading engine where runtime data is exchanged between the systems, so as to effectively monitor a Pre-Trade validation in cases where short-selling is prohibited.

Elements are the entities having direct access to the Depository System. Following are the main elements:

• Participants
  By Participants we mean Stock Brokers, Investment Bank & Cutodian Banks maintaining client securities account for providing custody services to Investors.
  
• Pledgee
  Pledgees are Financial Institutions admitted to the Depository for accepting pledge of Securities in the Depository System.
  
• Transfer Agent / Registrars
  Registrars of Companies access the Depository System to Approve Deposit Request & Withdrawal Request of Investor.

• Deposits
  For converting Physical Securities to book-entry form.
  
• Withdrawal
  For converting book-entry securities to Physical Securities.
  
• Free Delivery
  
• Intra Account Movement:
  Movement of Securities between two accounts of the same client is called Intra-Account Movement.
  
• Inter Account Movement
  Movement of Securities between two different client accounts is called Inter-Account Movement.
  
• Pledge
  Placing Securities under Pledge will mark lien on the securities. Though the securities will remain in the ownership of the Client but the control on the securities will lie with the Financial Institution in whose favor the Pledge is marked.
  
• Defining Book Closure, Announcements & Apply Date
  On the basis of announcement the calculations on bonus, right shares or dividend will be performed. On the apply date the actual announcement will take effect in the System.
  
• Bonus
  Bonus Shares are automatically credited to the respective clients on the apply date and communicated by the Issuer of Securities.
  
• Cash Dividends
  Complete information is available to the Registrars for preparing and dispatching Dividend Warrants.
  
• Right Shares
  Complete information is available to the Registrars for preparing and dispatching Right Allotment Letters.

A wide range of reports is available to the Elements, giving comprehensive information to all. Different Parameters are available in each report so that only meaningful and desired reports are fetched.

• Listing Reports
  Containing information for public at large.
  
• Account Reports
  For Participants and its Clients. This includes Balance and Activity Reports.
  
• Pledge Reports
  For Pledgors, Pledgees and their Clients. This includes Balance and Activity Reports.
  
• Registrars / Transfer Agent Reports
  There are various reports like, List of Beneficial Owners, Share book Detail, Announcement Reports, and Reconciliation Report.

The system is capable of handling multiple types of Clearing Cycles e.g. T+3, T+2, T+1 & T+0. Elements are the entities having direct access to the Clearing System.

• Clearing Members
  Clearing Members are Stock Brokers of the Exchange settling their positions on the Settlement Date.
  
• Settling Bank
  Banks having access to the Depository & Clearing for confirm payment from the stock brokers against their settlement position to the Clearing Company.

• Netting of Securities
  This is an automated process. After the closing of Trading Hours on the Trade Date, the system will perform a netting position of securities and cash of each broker. The netting of securities can be performed Broker-wise and even Client-wise (in case Client Level netting is required). The netting of money obligation against the trades will be done broker-wise to show are payable or a receivable position of each broker.
  
• Pay & Collect
  On the basis of netting of Cash Obligation of each Stock Broker. The Pay & Collect position is available to the Settling Banks. A Pay means that the Broker has a receivable position and has to receive the amount from the Clearing House, which is the Central Counterparty. A Collect means that the Broker has a payable position and has to pay the amount to the Clearing House. The Settling Bank will Debit and Credit Brokers’ bank accounts against Clearing House’s Bank Account on the Clearing System on the basis of settlement position available in the Clearing System.
  
• Settlement of Securities
  Securities will automatically move from the Sellers’ Depository Accounts to the Buyers’ Depository Accounts. But they will be parked in the Buyers’ Depository Account in Blocked form. They will be unblocked after confirming that all the Pay Position Stock Brokers have cleared their obligation. This is done minimize the risk of the Clearing House.
  
• Defining Book Closure, Announcements & Apply Date
  On the basis of the basis of book-closure the trading on T+1 and T+0 will be performed.
  
• Clearing Merge
  In case of unforeseen and emergent cases where settlement could not be carried out on a business day. The settlement will be merged with the next settlement.

InfoTech IMS System supports Delivery vs. payment (DVP). DVP is a way of controlling the risk to which securities market participants are exposed. Delivery of securities (i.e. the change in their ownership) is done simultaneously with payment. This means that neither the buyer nor the seller is exposed to the risk that the other will default. It directly protects security market participants (such as brokers) rather than investors. This indirectly reduces the cost and risks of trading for everyone.

DVP is far from being a perfect system. Unless settlement is real time (done immediately on the trade being agreed) it means that, if there is a trade failure, trades will have to be unwound. If buyers are allowed to sell before settlement (as usual), multiple trades may have to be unwound for a single failure. Being forced to unwind a trade can mean investors make a loss.

Securities lending is the temporary transfer of securities on a collateralized basis. In many markets it is an important activity, contributing to greater liquidity, narrower spreads and improved risk management. Most SBL activity takes place on the over-the-counter (OTC) market, hence statistics on volumes are not readily available.

Most SBL transactions are against collateral, which can be in the form of cash, securities or other assets. The eligible collateral will be agreed between the parties at the outset, including the initial margin, the maintenance margin, and concentration limits (ie to ensure that the collateral can be liquidated in need).

SBL facilitates a variety of transactions in the market, and so is an important support for market liquidity. It is a complex business with an involved transaction process. Before executing a transaction, the borrower has to assess the creditworthiness of the lender, and then negotiate the terms and sign an agreement with him. The borrower then has to take delivery of the securities, deposit collateral, deposit further collateral if called upon to do so by the lender, make the lender whole for any dividends or other benefits arising from the underlying securities, and finally return borrowed securities on the due date while at the same time taking delivery of the returned collateral.