Introduction
Are you inspired to enter the stock market? Do you want to purchase shares or stocks of leading companies or emerging businesses? If so, you need to open demat account with a leading broker. When it comes to buying stocks online, you need an online demat account with the right brokerage company, backed by best in class industry practices and critically-awarded research and analysis teams. To know how a demat account can work in your favour, let’s learn what is a demat account and understand its importance.
What is a demat account?
A demat account is the short-form for dematerialised account. Opening a demat account gives you the facility of storing your stock investments and securities electronically. Consider your demat account as similar to your bank savings account. That means, just as your bank savings account holds your cash and money securely, a demat account stores your online securities in assets such as stocks, exchange-traded funds, mutual funds, bonds and more in one repository.
What does dematerialisation mean?
The term dematerialisation in demat account is a procedure of converting physical share certificates electronically. Holding electronic stock investments can allow you to access from any time and anywhere securely. If you’re looking to trade and invest online in the stock market, you need to open demat account with a Depository Participant [DP]. Dematerialisation eliminates the need for you to store physical share certificates. It facilitates a streamlined method of tracking and keeping your online shares.
Importance of a demat account
The Securities and Exchange Board of India (SEBI) is the statutory regulatory body established by the Indian government. It stipulates that every individual intending to invest or trade in Indian securities must hold a demat account. That means, without an online demat account, you will be unable to conduct securities trading in India; thus, making opening a demat account a mandatory requirement.
Wide range of benefits
A demat account provides you with many features and benefits when trading in the stock market. Some of these include:
- Presenting you with a permanent record of all your trading transactions in stocks and securities
- Offering you a safe and secure electronic wallet that stores your online assets securely
- No worry of theft, fraudulent exchange or misplacing your physical share certificates
- It eliminates the possibility of fake signatures on physical shares.
- Allows you to process securities transactions instantly.
- Enables you to convert your physical share certificates digitally.
- Allows you to convert your online securities into physical documents
- You can choose to trade in any kind of securities and volume you prefer.
- Storing your shares online does not involve paperwork, stamp duty charge on share transfer anymore.
- Allows you to trade smoothly without worrying about the number of securities to accommodate costing.
- It gives you access to critical and valuable market information such as investment comparison charts, live price tools and more.
- Provides you with the essential information you need to make suitable investments or trading decisions.
- It does not ask for any minimum balance requirements, nor is there any limit number of trading transactions.
- You can choose to suspend your account for specific periods to limit the flow of debit or credit into the account.
It is easy to open and manage your demat account. You can choose to open a trading account and link it to your demat account. To begin trading in the stock market, you will need to transfer funds into your trading account, and for that, you will need to link your bank account to your trading account. On adding funds to your trading account, you can place an order to purchase stocks. Since both your trading and demat accounts are interconnected, the process of buying and selling shares takes place smoothly and without hassle.
Disclaimer:
ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. – ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai – 400020, India, Tel No : 022 – 2288 2460, 022 – 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
