A lot of Individuals are getting confused about do they require a Demat account for buying & selling shares in the market?
They will be amazed to know that, in our contemporary world, almost each of the transactions in the stock exchange, as well as all the bank settlements & financial cleaning, happens through the Demat account.
Buying & selling stocks are very convenient through Demat accounts; even according to some users purchasing and selling stocks has become as simple as clicking a button for them.
To buy & sell shares in the market, Individuals will also require a trading account because this Demat account refers to a repository of their shares.
But Individuals have to keep one thing in their mind they cannot transact on their Demat account. They can only have chances to transact on their trading account.
Why is Demat Account used for?
There are no extra things people have to follow for a Demat account. This account works just like a bank account in terms of concept.
The using method of this account is mentioned below-
- Here a bank account holder keeps money in the account
- The transaction entries in the passbook are made accordingly by the customers using.
- Here, instead of currency, the securities are kept in electronic form; it is a special feature of a Demat account.
- From this electronic form, credit as well as debit of securities may be created. (etc.)
A share market Demat account is referred to where Individuals’ equities are held in the form of dematerialization. To open a Demat account, several brokers are available who offer opening an online share market Demat account.
Can a Demat account be beneficial for buying & selling stocks?
Currently, the security & exchange board of India has also been actively promoting Demat accounts since the popularity of the stock market at the turn of the century.
If people started transactions through demand account, they would benefit due to several factors, such as –
- Convenience,
- Protection,
- Cost-effectiveness (etc.).
Multiple problems such as mutilation, loss of certificates, and theft are eliminated when Individuals’ securities are held in dematerialized form.
Moreover, the old processes involving stamp papers are eliminated, but in this process, a transaction is done through a Demat account, which is very convenient as well as cost-effective, and easy.
What is the main purpose of opening a Demat Account?
This Demat account makes buying & selling very easy in terms of stock market courses. An investor or marketer can easily open a Demat account by just completing the process of registering with the help of a brokerage firm or even from a sub-broker.
This account can then be used to purchase and sell such things –
- Bonds
- Securities
- Derivatives (etc.)
Besides those things, this account also serves as a storage facility for a stock portfolio.
How to open a Share Market Demat Account?
Now comes to the most important point, for opening a Share Market Demat Account Individuals needs to follow the below steps –
- At the first step, Individuals need to choose a DP who will serve as an agent for the depository is the first step for opening a Demat account.
- Then fill up the account opening form must be completed by original documents of account holders.
- Then in-person verification is started until the account holders agree to the terms of the agreement as well as the charges.
- After that, the investor can easily use this by logging into their account. (etc.)
Method of buying & selling stocks through Demat account –
To buy or sell shares through a Demat account, an investor always needed a trading account. Although, they also require a stockbroker in addition to a Demat account.
As we all know, the trading account usually shows a single account’s history of buying and selling.
And in this Demat account, after the buying price is charged as well as before the pay-in date, the sub-broker or broker is only responsible for financial transferring the shares to the investors or marketers Demat account.
Conclusion:
Before some practice, Individuals must obey SEBI-generated rules when purchasing or selling any shares through a Demat account. But before any investment in the share market, people must have remembered one thing they can select a reliable financial partner.