Buy a share in India and in the US, and the trade looks the same: tap Buy, see Executed, and the shares arrive the next working day (both markets settle on T+1). But who is recorded as the owner is very different.
How the trade itself works is in What Happens When You Buy a Stock? This post is about what happens to the shares afterwards.
| India | United States | |
|---|---|---|
| Where shares are recorded | Depository: CDSL or NSDL | Central depository DTC, then your broker’s books |
| Whose name | Yours (your demat account) | Usually the broker’s: “street name” |
| You are | The registered owner, at the depository | The beneficial owner, on the broker’s books |
| If the broker fails | Shares stay in your demat account | A trustee returns customer assets; SIPC covers shortfalls up to a limit |
| How to check | CAS statement from CDSL / NSDL | Your broker’s statements |
India: Your Name, at the Depository
In India, shares are held in a demat account at one of two depositories, CDSL or NSDL, in your own name. Your broker (Zerodha, Groww, Upstox, whichever you use) is usually the depository participant: the counter through which the account is opened and operated. The record itself sits at the depository. More on this in Who Actually Holds Your Shares?
US: Street Name, Through DTC
In the US, most shares are held in street name. The company’s register typically lists Cede & Co., the nominee of the Depository Trust Company (DTC), as the owner. DTC’s records show which brokers hold those shares, and only your broker’s own books show that some of them are yours. You are the beneficial owner: you get the price changes, dividends and votes, but your name isn’t on the company’s register.
In practice, this is why company mailings and proxy votes reach US investors through their broker rather than directly from the company.
What Happens If Your Broker Fails?
- India: fully paid shares in your demat account are in your name at the depository, so they don’t become the broker’s property. You can move them to another depository participant. Shares bought on margin (MTF) are pledged to the broker, and cash in your trading account is held by the broker: those are separate questions.
- US: a court-appointed trustee takes over the failed broker and returns customer assets. Shares held in street name are returned from the pool of customer property. If assets are missing, SIPC covers each customer up to $500,000, including up to $250,000 in cash. SIPC replaces missing assets; it does not cover losses from prices falling.
Can You Hold US Shares in Your Own Name?
Yes, through the Direct Registration System (DRS), if the company offers it: the shares are moved from your broker to the company’s transfer agent and recorded in your name. The trade-off is convenience: to sell, you usually have to move them back to a broker first.
Buying US Stocks From India
Apps that let Indian investors buy US stocks usually work through a US broker. Those shares are held the US way, in street name at that US broker, and the US rules above apply, not the Indian demat rules. It’s worth checking which broker holds them for you.
Why the Two Systems Differ
India’s depositories were built when it moved from paper certificates to electronic shares, with an account for every investor at the centre. The US system grew out of the paper era: certificates were locked up at DTC and tracked broker by broker, and brokers kept track of their own customers.
Engineers will recognise the two ledger designs: one account per owner in a central ledger, versus omnibus accounts at the centre with sub-ledgers at the edge. The first makes ownership easy to see and check; the second puts more trust, and more record-keeping, at each intermediary.
This article explains how the systems work. It is not financial, legal or investment advice, and rules change: check the current ones with SEBI, the SEC or FINRA, or your broker.