An Essential Account for stocks and ETFs trading - Jinz Haiggh Blog

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An Essential Account for stocks and ETFs trading

stock is a generic term utilized to explain the ownership certificates of any business. On the other hand, a share refers to the stock certificate of a specific establishment.

Having a demat account is essential for stocks and ETFs trading and importantly, it is not involved with stamp duty. In the last decade or like that, the stock market has relocated in the direction of paperless trading.
From the investors’ point of view, it was really a burden to handle tons of stock certificates and for them, a demat account has become essential.

Not possessing a demat account or depository has become now the greatest entry obstacle for making the investment in equities.

Nowadays, more and more entities (spot market and commodities futures) are transferring to the dematerialised trading form. A 'dematerialised' or demat account possesses shares in electronic format and by this way, it is saving you from the trouble of holding shares in paper format.

Depository Functions: A depository is almost identical to a bank. It possesses shares belonging to investors in electronic form. The investor needs to open an account with the depository via a Depository Participant.

The DP is a negotiator between the investor and the depository. In India, two depositories are there, viz., Central Depository Services and National Securities Depository. Several banks (SBI, ICICI Bank, HDFC Bank, and others), brokers (MotilalOswal, Indiabulls, and India Infoline) and institutions play the role of DPs.

Opportunities Provided by DPs: The shares you have bought and sold make a reflection in your demat account. Any shares that you are possessing in paper format can also be dematerialised and preserved through the way of electronic credit in your demat account. In recent times, stock exchanges have made it easy for the purchasing and selling of mutual fund schemes on the exchange.

The DP offers you an account statement at regular intervals and it displays the balance of shares involved with your demat account along with the transactions within a timeframe.

Opening Procedure

A person can open a Demat account by taking help of any bank or through the help of financial institutions and brokers. Generally, banks provide amazing rates for a demat account if that individual holds his/her savings account with them.

You can also go for online stock trading for opening a DP account and trading account more conveniently with the same financial institution or broker.

DPs charge transaction charges for the purpose of debit of securities, annual maintenance fees, thepledge of securities fees along with several other charges including charges for dematerialisation. The fees associated with DP services vary across the industry.


Within the depository system, the ownership along with the transfer of securities happens through electronic book entries. It offers several benefits.

Buying and selling physical securities is involved with risks, such as mutilation of certificates, theft of stocks, and loss of certificates in times of moving to and from the registrars.

To know more about this topic, you can search the internet or contact an expert in this field. 
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