Demat account or Dematerialised account enables investors to hold stocks in the electronic form and provide safety and convenience in trading. An investor can not buy/sell equities without using a Demat account. Demat accounts are maintained by two depositories, National Securities Depository Limited(NSDL) and Central Depository Services Limited(CDSL), and a Depository Participant(DP) plays an intermediary role between investor and depository.
Remember To Check Out A Few Things Before Opening A Demat Account
An investor who wants to trade in the stock market needs to open a Demat account online or offline. With the convenience of an online account opening facility, opening a Demat account has become a simple process. An investor needs to pick a stockbroker and apply for a Demat account. However, an investor needs to consider a few things before opening a Demat account.
- Demat Account Charges
It is important to check the charges associated with opening and operating a Demat account such as account opening charges, annual maintenance charges of a Demat account, and transaction charges. Some leading stockbrokers offer the facility of opening a Demat account with zero charges or minimum charges and offer industry-wide low brokerage. An investor can open a Demat account online with one of these so that he can manage his portfolio more cost-effectively.
- Documentation work and KYC Update
An investor needs to check his list of documents required for opening a Demat account. The mandatory documents are- a copy of PAN Card as identity proof, copy of Aadhar Card/ Passport/ Driving License/ Voter ID or last three months bank statement as address proof, passport-sized photograph of the applicant, signature with white background, bank statement with the account number and IFSC code, and one cancelled cheque as bank details. An investor needs to update his Know Your Customer(KYC) as per the Securities and Exchange Board of India(SEBI) regulation. Some pioneering stockbrokers provide hassle-free service and open a Demat account within 10-15 minutes after documentation and KYC update.
- Technology & Trading Platform
In the stock market, every second of trading hours is valuable, especially for intraday orders. An investor should check with the trading platform available with stockbrokers. It should be smooth functioning and quick responding. Select a stockbroker who facilitates a trading platform that is fast, efficient, and handy to use. Before opening a Demat and Trading account, an investor should consider trading platforms as an important factor to be able to trade conveniently in the future.
- Supporting Service
An investor can open a trading account online to trade in the stock market. Apart from the trading facility, some more services affect the mutual relationship of investors and stockbrokers. How long does a stockbroker take for opening a Demat account? How long it takes to dematerialise the shares? Whether it credits the corporate benefits in the Demat account itself or not? How long does it take for resolving the issues? These are some ancillary services that an investor seeks from his stockbroker.
- One account for multiple products
Many leading brokerage houses offer a handy Demat account that enables an investor to buy/sell multiple financial products from a single account. An investor can buy/sell Equity, Futures & Options, Mutual Funds, and Exchange-Traded Funds(ETF) from his Demat account. It saves him valuable time and prevents unnecessary formalities.
An investor should be sure that he has complete control over his Demat account and can access it whenever and wherever required. Demat account is a medium of a mutual relationship of two, an investor and a stockbroker. Therefore, an investor should pick his stockbroker after reviewing all the discussed points.
