What are Depositories, Clearing Houses and Other Intermediaries Stocks?

Depositories, clearing houses, and other intermediaries stocks refer to the shares of companies that provide the critical infrastructure and backend services needed for the smooth functioning of financial markets.

These companies operate behind the scenes to make sure every trade is processed, settled, and recorded correctly. CDSL and NSDL hold securities in digital form and manage demat accounts, while NSE Clearing Ltd and ICCL ensure secure settlement of trades.

Other middlemen such as CAMS and KFin Technologies provide mutual fund processing, SIPs, and investor services. These businesses are crucial in facilitating easy, secure, and quick transactions in the stock market.

As retail participation increases, demat accounts, and mutual fund SIPs in India, these businesses are expanding fast. Their stocks are renowned for consistent revenues, high margins, and long-term growth prospects.

Why You Should Invest in Depositories, Clearing Houses and Other Intermediaries stocks?

You should Invest in Depositories, Clearing Houses and Other Intermediaries Stocks for 3 main reasons. The reasons are Backbone of the Market, Monopoly or Duopoly and Scalable Business Models

• Backbone of the Market: These companies operate silently in the background, but without them, the stock market wouldn’t function. CDSL and NSDL store all your stocks in dematerialized (digital) format. When you buy a share through Zerodha or Upstox, it’s CDSL or NSDL that actually holds your stock.
• Monopoly or Duopoly: These companies operate in markets with little or no competition, making them near-monopolies. CDSL and NSDL are the only two depositories in India. Out of the two, CDSL has the larger retail market share, over 11 crore demat accounts as of 2025. 
• Scalable Business Models: They don’t need to keep building new infrastructure to serve more users meaning higher profits as they grow. CAMS doesn’t own mutual fund products, it simply handles the backend services like SIP processing and investor queries. The same platform serves 1 lakh users or 1 crore users with minimal additional cost. 

Depositories, Clearing Houses and Other Intermediaries are the backbone of India’s financial markets, are subject to very little competition, and enjoy highly scalable digital operations. With increased retail participation and increasing investment activity, these firms are well positioned to be able to earn consistent, long-term returns, making them an attractive proposition for investors.

What is the Future of Depositories, Clearing Houses and Other Intermediaries Stocks?

The future of depositories, clearing houses and other intermediate stocks will be drastically changed since India is experiencing a wave of financial inclusion. From mere 4 crore demat accounts in FY20 to more than 15 crore in 2025, growing at a CAGR of more than 29%. Even so, just 10% of India’s population has a demat account compared to 60 to 70% penetration in developed economies such as the U.S. This implies huge headroom for growth, with the number of demat accounts likely to surpass 30 crore by 2030, almost doubling from existing levels.

The Mutual fund industry has grown at a CAGR of 18% over the past decade, reaching ₹50 lakh crore in AUM, much of which is managed by CAMS and KFin Tech, who collectively serve over 25 crore investor folios. As SIP flows consistently exceed ₹18,000 crore per month, the demand for backend infrastructure continues to grow in tandem.

What Factors Affect Depositories, Clearing Houses and Other Intermediaries Stock Prices?

Depositories, Clearing Houses and Other Intermediaries Stock Prices are affected by 3 main factors.The factors are broader market sentiment, regulatory reforms and Return on Equity.

• Broader Market Sentiment: Like all financial stocks, intermediaries are affected by interest rates, budget announcements, or global cues.During the 2022 market correction, despite strong fundamentals, stocks like CAMS and KFin Tech saw short-term declines due to overall bearish sentiment.

•  Regulatory Reforms: SEBI’s push to shorten settlement cycles creates more dependency on clearing and depository systems, raising their importance.India completed its shift to T+1 in 2023, and SEBI has started pilot testing T+0 settlements in 2024, which will increase operational scope for CDSL and clearing houses.
• Return on Equity: Investors love scalable, high-margin businesses. Stocks like CDSL and CAMS attract premium valuations due to strong financials. CDSL’s profit margins of 50%+ and RoE of 30%+ are higher than even many tech or FMCG companies, keeping institutional interest high.

In summary, the stock prices of Depositories, Clearing Houses, and Intermediaries are influenced by a combination of macro sentiment, regulatory guidance, and financial stability. As reforms get deeper and participation in the financials widens, those with strong RoE and robust models such as CDSL and CAMS are most likely to continue to appeal to long-term investors looking for stability and upgrowth.

What are the Advantages of Investing in Depositories, Clearing Houses and Other  Intermediaries Stocks?

Investing in Depositories, Clearing Houses and Other Intermediaries Stocks is advantageous for 3 main reasons. The reasons are High Profit Margin, Mutual Funds Growth and Technological Advancement. 

• High Profit Margins: Their monopoly and low cost structure translate into outstanding financials. CDSL consistently posts net profit margins of 50%+ and RoE above 30%. These are elite numbers even compared to top FMCG and tech companies. CAMS and KFin Tech also generate strong free cash flows, allowing them to pay healthy dividends and grow without debt.
• Mutual Fund Industry Growth: As AUM and SIP volumes increase, RTAs like CAMS and KFin Tech benefit through servicing more folios and transactions. CAMS reported strong earnings in FY24, driven by ₹50 lakh crore AUM in mutual funds and SIP inflows above ₹18,000 crore/month, directly impacting their topline.
• Technological Advancements: Faster digital onboarding (Aadhaar, UPI) makes it easier for new investors to enter markets, increasing intermediaries’ client base. Platforms like Zerodha, Groww, and Paytm Money have added millions of demat users with help from CDSL e-KYC APIs, driving indirect revenue growth.

Depositories, Clearing Houses, and Intermediaries are at the center of India’s financial ecosystem, with steady profitability, robust tailwinds of mutual fund growth, and scalable growth with tech-enabled investor onboarding. With deeper financial inclusion and faster digital adoption, such firms are set to generate long-term value for investors.

What are the Risks of Investing in Depositories, Clearing Houses and Other Intermediaries Stocks?

Investing in Depositories, Clearing Houses and Other Intermediaries Stocks is risky for 3 main reasons. The reasons are Regulatory Risk, Dependency on Market Volumes and Cybersecurity Risk.

• Regulatory Risk: SEBI can impose fee caps or rule changes that impact revenue. If it reduces demat AMCs or lets AMCs internalize RTA functions, firms like CDSL, CAMS, or KFin Tech risk losing recurring income. In September 2024, CDSL cut its debit transaction fee to ₹3.50 (from ₹3.75–₹5.50) under SEBI’s directive, benefiting investors but reducing its transaction revenue.
• Dependency on Market Volumes: These businesses thrive on market activity. A prolonged bear market or low trading volumes can significantly impact transaction-based revenue. During market slowdowns in COVID, transaction volumes dipped, affecting revenue growth for CDSL and clearing corporations. 
• Cybersecurity Risk: As digital infrastructure stakeholders, a failure in technology or cyberattack can drastically affect operations and confidence. Any extended outage in NSDL e-KYC or CDSL infrastructure within market timings could halt countrywide trading and settlement. In November 2022, malware was found in the systems of CDSL, which resulted in market network isolation and settlements getting delayed.

Although Depositories, Clearing Houses, and Intermediaries have good growth prospects, investors should also keep in mind regulatory risks, revenues tied to the market, and cybersecurity threats. It is vital to take an informed investment decision based on these risks along with structural tailwinds in the longer term for this key segment of the financial system.

When Depositories, Clearing Houses and Other Intermediaries Stock Prices Go Up?

Depositories, Clearing Houses and Other Intermediaries Stock Prices Go Up mainly due to 3 reasons. The reasons are Bullish Markets, Higher SIP Inflows and Growth in Demat Accounts.

• Bullish Markets: ​In periods of bullish market trends, stocks such as Central Depository Services (India) Ltd (CDSL) and Computer Age Management Services (CAMS) tend to grow strongly because of heightened market activity. In a bull run the share price of CDSL touched an all-time high of ₹1,664.40 on August 23, 2024, which is a 137.88% rise from its 52-week low of ₹631.
• Increased SIP inflows: Monthly SIP inflows have spiked from ₹10,000 crore in FY22 to more than ₹23,000 crore in FY25, propelling RTAs such as CAMS and KFin Tech. The rise propelled CAMS’ revenue by 27.6% YoY (₹370 crore in Dec 2024 quarter) and propelled KFin Tech’s market cap to ₹27,344 crore by the end of 2024.
• Demat Account Growth: More open demat accounts, such as CDSL, enjoy account maintenance charges and transaction fees with such increased demat accounts. The share price of CDSL rallied more than 10x between 2020 and 2023 as demat accounts grew from 4 crore to more than 12 crores with pandemic-era retail participation driving it.

Depositories, Clearing Houses, and Intermediaries’ stock prices increase with increasing investor engagement, trading volumes, and investment inflows. With the fast financialization in India and digital onboarding, these companies are poised to reap strong structural tailwinds and continued market growth.

When Depositories, Clearing Houses and Other Intermediaries Stock Prices Go Down?

Depositories, Clearing Houses and Other Intermediaries Stock Prices Go Down mainly due to 3 reasons. The reasons are Bear Phases, Loss of Monopoly and Reversal in Reforms.

• Bear Phases: These businesses are highly dependent on trading activity. In a bearish market, investor participation drops, reducing demat openings, SIP inflows, and trading volumes.In early 2022, market volatility and correction led to a decline in daily trading volumes. CDSL’s stock fell over 30% from its peak as new demat additions slowed and revenues dipped.
• Loss of Monopoly: New players, internal tech adoption of AMCs, or other platforms may reduce their market share. If large AMCs start internalizing RTA operations (as permitted by SEBI), this may decrease reliance on CAMS and KFin Tech, impacting their long-term revenue perspective.
• Reversal in Reforms: Stocks rally on reform momentum. If implementation is delayed, expected growth doesn’t materialize, hurting sentiment. After the shift to T+1 in 2023, SEBI’s move toward T+0 in 2024 created buzz. Any delay here could slow growth for clearing corporations like NSCCL or intermediaries like CDSL.

It is important to understand the dynamics of market cycles, regulatory reforms, and changing competition while investing in Depositories, Clearing Houses, and Intermediary shares. With these being the pillars of India’s expanding financial structure, they hold good long-term prospects—but performance is heavily dependent upon external influences that smart investors need to track regularly.

What’s the difference between Depositories, Clearing Corporations, and Custodians?

The difference between depositories, clearing corporations and custodians are as follows

Depositories hold securities electronically, clearing corporations provide safe trade settlements by handling risks, and custodians safeguard and manage assets for clients. They together create a smooth system that maintains the integrity, efficiency, and safety of global financial markets.

How do intermediaries like CDSL or NSDL generate revenue?

Intermediaries earn revenue through 3 main sources. The main sources are Transactional, Issuer-based, and Value-added Services.

• Transaction and Account Charges: They make money from fees charged to brokers (DPs) for each buy/sell transaction and earn demat account annual maintenance fees, which are mostly charged from investors.
• Issuer and Corporate Action Fees: Companies listed charge depositories an annual issuer fee and other charges for handling dividends, bonus issues, right issues, and IPO allotments.
• Value-Added and Compliance Services: Revenue is also derived from value-added services such as e-voting, e-statements, processing of KYC, and data monetization, which cater to both investor convenience and regulatory requirements.

Their business model is based on volume — the more demat accounts, trades, IPOs, and corporate actions they process, the more revenue they accrue. This is why increasing retail participation in stock markets directly contributes to such depositories.