In 1996, a new concept of dematerialization was introduced in the Indian stock market. This concept has introduced a new phase of trading. Prior to dematerialization, securities were traded in the stock market in physical form, but this process changed the mode of trading to digital form. Digital investment and trading in the stock market enable every investor to buy and sell shares anywhere without hurdles.
To trade and invest funds in the stock market, every investor requires various elements in which the primary requirement is the best demat account. It helps to invest the funds, keeps digital records of every security with depositories, withdraws funds anytime, and analyses past trends of securities. Before investing or trading in the stock market, investors should have a knowledge of required accounts and formalities to open it.
What is a Demat Account?
A demat account is a digital safe for traded securities in the stock market. After the dematerialization process, trading in securities requires a digital account that can facilitate buying and selling of securities through digital mode. A demat account holds and records every stock and other securities with depositories that enables the smooth transfer of ownership from one holder to another. Brokers dispense online facilities to open a demat account. Online account opening saves a lot of time for every investor that he or she can utilize in the analysis of stocks before buying. It also allows easy transfer between different demat accounts, and various other activities.
Features of a Demat account:
A Demat account, that offers a path to trading in the world of the stock market, has various features. These features guide investors to understand its concept:
- It’s a digital and computerized storehouse of stocks, mutual funds, bonds, money market instruments, and other stock market instruments.
- It doesn’t need any physical and paper form security. Every trading activity is executed through a digital mode.
- Unlike physical trading, it requires less time to transfer stocks between holders.
- Digital record of stocks ensures the protection from theft, wear and tear, and other damages to the securities.
- Demat account can open online with any broker with a negligible or without cost. The account opening process varies from broker to broker.
After understanding the features, the investor should have knowledge of how he or she can open a demat account. The steps below will give a view to the account opening process with any kind of broker in the stock market.
How to open a Demat Account?
Have you ever faced the process of opening a bank account? The bank account opening requires multiple documents and verification. After completing certain steps, you get your account number. Just like a bank account, an online demat account opening demands certain steps and requirements that need to be fulfilled without any error.
- Prior to any activity, you should analyse the need for a demat account. Whether you can trade without it or you can only trade through it?
- After analysis, you should select the broker with whom you want to open your account online. A broker can identify by comparing various parameters like initial cost, per-transaction cost, annual maintenance fees, and other requirements.
- A selected broker offers an online registration process that will ask you to fill in your personal details and relevant information. Multiple documents will also be required to upload for the registration. These documents would be related to identity, bank details, income, and other related information.
- Proper registration takes around an hour in which details and other information match with the uploaded documents.
- After this process, a KYC team of a broker verifies every document and approves for effective activation of the account.
- Successful registration and activation ensure the issuance of a unique client number that will give an authority to invest funds in the stock market.
Conclusion:
Every single trading and investment transaction in the stock market initiates through a digital account named a Demat account. It acts as a platform to trade, store and record the securities in digital format. By following certain steps, an investor can easily open this account and start his or her journey to the world of the stock market.
