Stock Market Trading Vs. Demat Account

India has begun its journey in electronic stock market trading from 1990. Any individual interested in carrying out stock market trade must open a trading account. Only using trading account one can sell or buy shares. Any transaction will happen only when there is an account. Whereas by using demat account one can store the stocks that have been purchased.

Typical Example 

Imagine a situation, when you purchase a hundred shares from SBI at ten ‘o’ clock in the morning. You wish to give out the same in the evening; then you must have an account to carry out this transaction/trade. But if you decide to keep a hundred shares with you, then you can store it in the demat account. You can understand that the trading account is required for any transaction to take place. A demat account will help you to store the shares.

Every account created for trading will have a trading ID. It can be used to do an exchange, and it provides identification for each transaction carried out.

Transaction Process

Find in detail regarding the process involved in operation from an investor perspective. Any stock market investors can transfer money from their respective bank account into a trading account.  The broker will provide the trading account for you to transfer money. All transactions will happen on that account. Shares can be bought from the market. Once the settlement time gets over, the demat account will be credited with the shares. When shares are sold, from the demat account the shares will move to the buyer's demat account. The buyer is the current owner of the share.

Working Of A “Broker – Depository Network” In India

NDSL and CDSL, the two depository establishment in India will hold your demat accounts. All details about the demat accounts are maintained by them. They also monitor the possession of openly listed shares of all individuals. Every Indian market investor and the trader can verify their properties using the demat account opened with this establishment.

Whenever a transaction takes place between you and your broker, the shares get transferred to your demat account with the help of the brokerage company. Hence the operation is very transparent. No brokers can cheat any individual. Every person can directly access his or her demat account. Only thing is, a person must make sure to confirm that the shares get credited in their respective demat accounts.  Sometimes brokers take advantage of the shares to margin and earn money for themselves.

To overcome such challenges, you must list the Best Demat Account InIndia and open an account.

Also, remember that the broker holds the trading account and the extra income earned.  When you select the right demat account service provider, you can stay assured of any such malpractices. Now that you know all about trading and demat account go ahead and make investments. No fear of getting deceived by anyone in the stock market. Thanks to advancement in technology that helps in making a transparent transaction.

Invest today and secure your future!