What is a Demat Account?

The functioning of stock markets has changed drastically after the introduction of technology. Long ago, the Bombay Stock Exchange use to run on floor trading system. With technological advancements, the system has completely changed. The amount of paper work has reduced significantly leading to no time wastage to issue share certificates to the shareholders.  Instead, the shares are now issued to the shareholders in electronic form via the demat account. In this article, we shall understand the meaning of demat account and understand its concept.

What is Dematerialisation (Demat) ?

Demat account is an account in which the dematerialised securities are stored and held. Dematerialisation is the process of conversion of physical shares certificates into electronic form.  In simple words, holding of securities in electronic form is possible through a demat account or dematerialised account. Every investor is allotted a separate unique id with their broker under which their securities can be held.

Let us have a look at the benefits of demat account.

Advantages of Demat Account 

Demat account has the following Advantage:

· It leads to automatic updation of the transactions with the company. Therefore, it eliminates the need to give details like address again and again for different transactions.

· It saves cost, as no stamp duty needs to be paid. Earlier, stamp duty was charged on every security transfer.

· Maintaining and managing securities in the demat account is much easier than holding them in paper form like share certificate.

· The problem of odd lots that existed earlier is no more there. Now shares can be transacted in any odd lot numbers as per the desire of the investor.

· The delivery risks like forge shares, theft of share certificates, wrong deliveries have been eliminated with the introduction of demat account. Once a trade is executed, it is automatically reflected in the demat account.

· Demat account is not only meant for shares. Other instruments like bonds, etc. can also be held in a single demat account.

Technological advancements have had a positive impact on the stock markets.  Now the transaction in securities can be done with just a single click. There are many brokerage houses in the market with whom demat account can be opened.

How to open Demat Account ?

Indira Securities is one of the top most financial service providers. By opening a demat account with us, you get the facilities to trade and invest in stock markets at low brokerage rates. We guide our clients in the IPO application process. You can trade using our mobile application. We provide regular stock recommendations to the clients using stock analysis tools. To open a demat account with us or for any query, reach us via call or email.