A Demat account, short for a dematerialized account, dematerializes the paper-form shares into electronic form. Using a single Demat account an investor can make multiple investments in securities from different companies. A Demat account is very similar to a bank account with a cheque book and a pass book to note the buying and selling of shares. The Depository Participant provides the periodic statements of the transactions.
The investors benefit with the latest trading platform, market analytics, stock market updates and quotes from the exchanges. The perfect synchronization of technology with updated information helps the investor in staying ahead in stock trading.
Demat account is an easy way of online trading
A Demat account holder trades in the share market with ease because of the safety and security of online trading. The process of opening a Demat account includes 4 easy steps:
- Approach a certified DP (Depository Participant) registered with the National Securities Depository Ltd. (NSDL) and
the Central Depository Services Ltd. (CSDL). This DP acts as the intermediary between the depositor and the investor.
- Fill up the form provided by the DP.
- Attach the required documents like identity proof and address proof.
- Produce the original PAN card during account opening.
Opening a demat account is a very simple and convenient process of holding securities. The Depository Participant (DP), registered with National Securities Depository Ltd. (NSDL) and Central Securities Depository Ltd. (CSDL), acts as the intermediary between the depositor and the investor. These DPs are the many stock broking firms, financial intermediaries, banks, sub-brokers etc. who are responsible for holding and transferring securities for the investor.
There are just 4 simple steps for demat account opening
- Select & approach a certified DP (eg. ShareKhan, HDFC Securities, Unicon Securities, IIFL etc.)
- Fill up demat account opening form given by the DP.
- Attach xerox copies of proof of address and proof of identity along with the demat form.etc.)
- Produce your original PAN card during demat account opening.
Benefits of Online Trading Account with Demat Account
Online trading is a convenient and safe way of trading in the stock market. Electronic maintenance of shares and securities eliminated the various problems involved with the physical shares.
- No risk of forgery, bad delivery, fake security, delay or theft as in paper shares.
- Reduced paper work and hence the low cost.
- Multiple transactions using a single Demat account.
- Cost per transaction is lower.
- Traders can work from anywhere.
- Investment in gold through ETFs.
- Investing in BeEs and IPOs is simpler.
- Ensures profit because of increase in volume of overall trading.