Demat Account - What is Demat Account, Basics & How it Works

1. WHAT IS A DEMAT ACCOUNT? Demat account is an account through which you can trade online in the stock market. In order to place your trade orders online on the trading platforms, you will then require a Demat account where your transactions can take place. In other words, the Demat account is as same as a Bank account. Just like a bank account holds your money, a Demat account will hold your securities. Your securities, in whichever form you hold be it stocks, bonds, exchange-traded funds, and mutual funds, will be held in electronic form in your Demat account. The Demat account allows you to keep your securities in dematerialized form rather than storing physical certificates. It is a must that you have a Demat account if you want to start trading in the stock market. Your Demat account can be opened with Depository Participants (DP). Depository Participants are the organizations that will serve as a link between investors and depositories. Two depositories that are registered with

2. SEBI as of now are NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited). Steps to Open a Demat Account. Opening a Demat account is not a lengthy and complex process. It can be opened in a few following steps: 1: In order to open a Demat account, you need to go to a depository participant. A depository participant is a broker who will execute all the procedures, requirements, fees, and more to open a Demat account. You will be required to fill an account opening form with your depository participant. 2: Next step will be to submit the required documents which can be your identity, address proof, photograph, and other necessary documents along with the form. 3: You and your depository participant will then sign an agreement mentioning the rights and duties of an investor. Getting through with the verification of your documents, your account will be opened along with providing you a Demat account number. Now, you need to link your Aadhar card with your Demat account along with completing KYC. From thereafter, you can start trading and your purchases will be credited and sale will be debited to your account. Now you are all set to start trading, more so, you can hold multiple Demat accounts with different depository participants. why we need a Demat account, let us discuss it in detail: 1.Adheres to Safety: Physical certificates of securities are always at the likelihood of being torn, damaged, or misplaced. There is never a certainty of holding physical certificates. However, stocks and securities kept in dematerialized form remain safer as online Demat accounts conform to many security regulations which make Demat account 2.Carries out Trading: You will be unable to trade or invest in the stock market without making a Demat account. All the transactions in the stock

3. market are implemented electronically and not having a Demat account will prevent you from starting trading. In the stock market, it is obligatory to carry out your trade electronically and hence you will require a Demat 3.Single Store for multiple securities: Investors may need to maintain different accounts for different types of securities such as debt, equity, etc. However, a Demat account prevents the usage of multiple accounts by allowing you to store every type of security and financial product in one single account. This will enable the safety of your securities and will prevent any kind of inconvenience by eliminating the chaos of maintaining multiple 4.Convenient: There were times when going to your broker used to be frequent when physical certificates were kept. But the Demat account being online and electronic have terminated such visits to broker. You can operate and trade online just by a few clicks, making trading 5.Not restricted to specified quantities: Buying security online while keeping a Demat account permits you to sell or purchase any number of shares, however, it was not possible when there was the use of physical certificates because investors had to buy or sell in specified quantities or number of 6.Reduction in Costs: Physical certificates come bearing a lot of additional costs such as stamp duty or storing costs. Whereas, the Demat account charge no such additional cost which leads to reductions in your expenses, and you can store securities online without having to burn a hole in your Conclusion A Demat account is a convenient way to trade online serving a lot of benefits, thus making your trading and investing experience hassle-free.