A Beginners Guide to Demat Account and Trading

Indian traders have covered a long journey starting from the days of offline trading to the period of understanding Demat Account meaning and online participation in the stock exchanges. It has been an overwhelming journey for long-term investors while a new and alien experience to the budding investors who are still at their learning stage. Here is a detailed guide for beginners to understand everything about Demat and trading accounts and how they help in performing trading activities in stock exchanges like the NSE (National Stock Exchange) and the BSE (Bombay Stock Exchange). After the SEBI (Stock and Exchange Board of India) came forward to mandate the use of the trading account, resulting in the compliance on having Demat Accounts, the picture of the Indian stock market has changed.

Without knowing about the tools of online trade, a trader cannot hope to succeed in his investment venture. Therefore, beginners should go through this article to get Demat Account explained and understand its usage too. With a brief introduction to the basics of Demat Account meaning, traders will be able to overcome their queries effortlessly.

What Is Demat and Trading Account?

Demat Account Meaning is a storage facility that the Depository Participants in the country offer to the stock market traders for storing their shareholding certificates electronically. These accounts do not come with any storage limit and there are no restrictions on the number of accounts that one can possess. All one has to worry about is finding the best Depository Participant in the county to avail the maximum benefits.

Trading accounts are also a service offered by the Depository Participants to help the investors perform online trading in the stock exchanges. Without a trading account, one can not get access to stock exchanges as per the SEBI guidelines. The SEBI has also simplified the trading account opening process for investors. Traders can easily open this account in the 2-in-1 facility where it gets automatically linked to the Demat Account.

The Three Essential Accounts For Online Trading

All these three accounts work in a link every time a trader buys or sells his shareholdings. The trading account gives access to the online stock exchanges, the savings account is for monetary transactions, and the Demat Account meaning is to hold the electronic form of bought share certificates.

Demat Accounts: Types And Features

The Demat Accounts have made investing in the stock market easier, safer, and more reliable than it was during its absence. The traders get three options while opening their accounts, and they have to choose the one that best suits their eligibility.

Regular Demat Accounts

The regular Demat Accounts are for investors who possess Indian citizenship and reside in the country. These accounts are best for regular as well as occasional investors as storing share certificates is safe.

Non-Repatriable Demat Accounts

The NRIs (Non-Resident Indians) who are temporarily residing in any other country but wish to invest in the Indian stock market need to open this account. It is termed as “non-repatriable” as the earnings from this account investments cannot be converted to any other currency.

Repatriable Demat Accounts

The NRIs who keep travelling from one country to another for work purposes while carrying the citizenship of India are eligible for this account. The balance of these accounts is transferable as well as convertible to foreign currencies, so it becomes easier for such investors to stay active and practise regular trade.

Exclusive Features of Demat Accounts

• It helps in converting share certificates into electronic forms without making any difference to their value or significance.
• It helps in the easy and quick transfer of shareholding certificates where traders do not have to wait for days to receive the postal services.
• It can help an investor in availing personal loans by pledging his Demat Account balance to the banks.
• It also allows one to avail the speed-e-facility from the Depository Participants.
• The Demat Account meaning also enables the investors to freely perform their trading activities without having to worry about the safety of their assets.

The Benefits of Using Demat Accounts

The Demat Account meaning lays many benefits to the users and budding investors who are yet to sprawl their roots in the industry. With these advantages, it becomes easier for investors to manage their assets.

• Demat Account offers swift and fast conversion of share certificates from their physical formation to the electronic form.
• These accounts enable increased market participation and stock trading volume of investors. It also helps those who could not make the most of their resources due to lack of time and activity.
• Demat Account meaning brings transparency between the traders, the Depository Participants and the market mechanism without compromising the efficiency of any of the three.
• It eliminates the need for constant paperwork and postal activities as everything can be processed online.
• It offers the gateway to convenient and direct communication with other investors in the circle as one can easily transfer his share certificates to his buyer’s account.
• Demat Account meaning comes with nominal or zero risks involved depending upon the reliability of the Depository Participant one chooses.
• The easy and user-friendly functioning of Demat Accounts increases the confidence of beginners and new traders.

The Demat Account meaning gives a new face to the stock trading industry as the investors have been able to overcome the miseries of maintaining physical documents. The best part about using these accounts is that one can get access to them directly through their smartphones and computers. Relish a radically different trading experience with the help of Demat and trading accounts.