Own your own Electronic shares
The trend of the internet has caused shares to be converted in the electronic form. This revolutionary option has been around for quite some time and has proved its success and efficiency in the share market. Hence, opening a demat account is an ideal way to conduct online share trading.
A demat account de-materialises your shares and makes it electronically held by the shareholder. The shareholder takes a virtual possession of his shares instead of a holding share certificates in a material form. All share transactions take place electronically through the demat account.
An investor can register for a demat account via an investment broker. Before registering, an investor should educate himself about what is demat account. The investor is provided a dematerialised account number through which he can conduct his online share trading. This account functions through a confidential internet password and a transaction password. Online transactions are automatically updated once the transactions are confirmed and completed. Also, bonus shares are directly credited to the investor’s account at the time of allotment.
The demat account can be opened through a depository participant. A depository participant (DP) is typically a financial organization like a bank, broker, financial institution, or custodian. It acts as an agent of the depository to make its services available to the investors who want to dematerialise their shares. You can obtain a list of registered Depository Participant’s from National Securities Depository Ltd (NSDL) or Central Depository Services Ltd (CDSL) websites.
Online share trading has a huge edge over physical share transactions. Opening a demat account have several advantages, such as the following:
- Since the shares are held electronically, all the hurdles associated with holding a physical share certificate are eliminated. There is no question of loss or damage of share certificate. Other pitfalls such as bad delivery of share certificate, fake securities, thefts and delays in transferring and procurement of shares are overcome.
- Transaction costs also come down as there is no stamp levied on dematerialised shares. Costs related to delivery of share certificate and transit costs are also eliminated. Also, printing and distribution costs are mitigated.
- Demat accounts bring ease in online share trading andenable a flow of smooth transactions over the internet. It also saves a lot of time by conducting quick transactions. It is a comfortable option for traders since they can operate from anywhere, without any location limitations.