Depository account for online share trading

Buying shares means that you are having a portion of a business. It is like acquiring a small piece of the cake from a bigger chunk. And an individual who buys shares of a company is known as the shareholder of the company.

The process of buying and selling of shares has become comparatively safe, secure and very convinient in the form of depository services. A Stock broker will provide it’s clients with the provision of depository services that includes settlement, clearing and custody of securities, registration of your secuirties and dematerialization of shares.

You may have come accross the term dematerilization several times when it comes to modern system of online share trading, but if you haven’t then by having a depository account, your paper shares will get converted to the electronic realm and every transaction made i.e. buying and selling of shares is purely digital and done through the fully automated stock exchnages like the BSE or NSE.

The broker in regards to online share trading or opening of a depository account, is the key to your success, as your dematerialised shares will be held in a depository, governed by the NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Securities Ltd.)

Your broker is a registered agent or a Depository Participant (DP) of the NSDL or CDSL, enabling you to hold your securities in your depository account. It is essential that you choose a DP who is a recognised name in trust and performance. As your broker will be responsible of your time and money. Make sure that your broker has a good track record of offering the latest trading platform and that you can execute trades and do so via multiple screens and that you have the stop loss option to avert potentially threatening losses down to a minimum.

With most of the brokers available you can make a phone call to place an order or you can place an order online. And your broker on your behalf will  facilitate either buying or selling of shares, provide market intelligence with the help of years of analytical research, live updates, charts on market movement and statistics of each and every stock you are interested in. So if you have done your homework in sharemarket in India and ready to take a leap in online share trading, then subscribing to a broker and opening a depository account is the first thing that you must do.  

Open Demat Account for Better Trading

A Demat account in India enables an investor to buy and sell stocks list in the exchange and hold shares and securities electronically rather than in the physical form. The Securities and Exchange Board of India (SEBI) has made it absolutely necessary for all retail investors to open a Demat account, to trade in the equities market. The Depository Participants (DPs) are empowered by SEBI to provided services to the investors trading in securities, to convert physical share certificates into dematerialised shares. Your shares and other securities will get electronically held in your demat account, rather than you acquiring physical certificates of the shares.

There are many benefits regarding the opening of a demat account –

• De-materialised shares are safely and conveniently held in a demat account.
• Stamp duty is not levied on the account holder, while transferring of shares.
• 100% safety and hassle free way of buying and selling of shares and securities.
• Many broking companies opening a demat account generally do not charge, for opening an account.
• One can easily browse the internet for genuine brokers and the variety of demat account charges and services offered.
• Just like you can de-materialise shares, you can also re-materialise your shares into physical shares.
• Most broking companies provide trading platforms with effortless buying and selling of shares and securities.
• With live market updates, expert analysis and portfolio management are offered by broking companies with demat account.

The need for a demat account is all the more important, for the many pitfalls and limitations that physical shares has. Your physical shares may get displaced at the time of transition from one place to another, can get easily burned in case of fire, if you don’t get your signature right, then it becomes very difficult in trading etc. And perhaps this clarifies why holding shares electronically in a demat account is better than the paper form.