Dematerialized account, popularly known as Demat account, is an account an investor needs to have with an investment broker or a bank to trade shares and securities electronically, instead of the conventional possession of physical certificates. It was introduced in 1996, and has grown very popular since then encouraging faster transactions of securities.
To initiate the purchases of securities, an investor simply needs to open a Demat account with a Depository Participant. Purchase and sale of securities can be started as soon as the transactions are confirmed, and the DP gives periodic statements of these transactions just like the pass book of a bank account. The procedure is very simple when compared to the conventional trading ways.
Advent of Demat accounts eliminated the risks involved in physical shares such as forgery, loss of certificate, loss through fire or transit, mutilation, counterfeiting, forgery or signature mismatch, making it the safest way for security transaction and thereby reducing the transaction cost too. It also provides the traders with the convenience of working from anywhere just being online.