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!
Stock Market Trading Vs. Demat Account
Reviewed by Sandeep malik
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