Introduction:
A demat and trading account is just like a bank account. However, instead of holding money in your account, demat holds your securities – such as shares, bonds, or debentures. It is essential to maintain a demat account if you are planning to trade in securities. This electronic account will hold your securities serving as an alternative to the physical certificates. To continue trading in securities of the Indian market, the investor must open a Demat and trading account with a Depository Participant (DP).
Who is a Depository Participant?
While depositories are organisations that hold your securities electronically and also facilitate transacting, a Depository Participant (DP) act as agents between depositories and investors. The two depositories registered with SEBI for demat services are National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
The benefits of a Demat account:
1) Physical securities are prone to risks like thefts, losses, or damage. These risks are eliminated with the opening of a demat and trading account, that allows holders to save all their investments in electronic form.
2) The transaction cost is significantly lesser compared to the physical segment since here you don't have to pay stamp duty.
3) With the elimination of the paperwork, the time required for transactions is reduced. It enables the account holder to avail more of demat services and use it with more efficiency.
4) We know it is a tedious task to maintain physical certificates. Moreover, keeping track of their performance is an extra responsibility. Through a demat account, users can track all their investments through a single account.
5) With physical certificates, buying and selling of securities were possible only in the specified quantities. The convenience of dealing with odd lots or single security was also not available. Demat accounts help investors this issue.
How to open a demat account?
Following are the steps on how to open a demat account and trading account with a depository participant (DP) registered with SEBI.
• Choose a Depository Participant (DP). Most financial institutions and brokerages offer this service.
• Fill the demat account opening form. Submit along with copies of the required documents and a passport-sized photograph. Also, carry the original documents for verification.
• During the process, an In-Person Verification would be conducted out. A member of the Depositary Participant’s staff would contact you to verify the details containing in the account opening form.
• Once the application form is processed, the DP will deliver you with an account number or client ID. You can use this details to access your demat services online.
A demat and trading account is just like a bank account. However, instead of holding money in your account, demat holds your securities – such as shares, bonds, or debentures. It is essential to maintain a demat account if you are planning to trade in securities. This electronic account will hold your securities serving as an alternative to the physical certificates. To continue trading in securities of the Indian market, the investor must open a Demat and trading account with a Depository Participant (DP).
Who is a Depository Participant?
While depositories are organisations that hold your securities electronically and also facilitate transacting, a Depository Participant (DP) act as agents between depositories and investors. The two depositories registered with SEBI for demat services are National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
The benefits of a Demat account:
1) Physical securities are prone to risks like thefts, losses, or damage. These risks are eliminated with the opening of a demat and trading account, that allows holders to save all their investments in electronic form.
2) The transaction cost is significantly lesser compared to the physical segment since here you don't have to pay stamp duty.
3) With the elimination of the paperwork, the time required for transactions is reduced. It enables the account holder to avail more of demat services and use it with more efficiency.
4) We know it is a tedious task to maintain physical certificates. Moreover, keeping track of their performance is an extra responsibility. Through a demat account, users can track all their investments through a single account.
5) With physical certificates, buying and selling of securities were possible only in the specified quantities. The convenience of dealing with odd lots or single security was also not available. Demat accounts help investors this issue.
How to open a demat account?
Following are the steps on how to open a demat account and trading account with a depository participant (DP) registered with SEBI.
• Choose a Depository Participant (DP). Most financial institutions and brokerages offer this service.
• Fill the demat account opening form. Submit along with copies of the required documents and a passport-sized photograph. Also, carry the original documents for verification.
• During the process, an In-Person Verification would be conducted out. A member of the Depositary Participant’s staff would contact you to verify the details containing in the account opening form.
• Once the application form is processed, the DP will deliver you with an account number or client ID. You can use this details to access your demat services online.
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