Use of Demat & Trading Account

When taking consideration into investing in stock trading, the requirement for having a demat and a trading account comes into the whole process. For those who are comparatively new to investing in stocks, the mainly common queries are about why is there a necessity to have both these accounts and what is the connection among them. Fine, the difference will be understandable enough. The time of maintaining your stock collection is a thing of the earlier period. The reservoir take steps by SEBI (Securities and Exchange Board of India) empowered equity investors to have a demate account which converts your shares and stores them in electronic form. At present, every time you go in to open a Demat account, the Bank (or any new Depository member) will suggest to open a Trading Account for you as well.

Advantages of demat account:- The additional benefit/precise shares preferred to the investor will be instantly credited into his account. There is no threat due to loss on account of theft or damage. Transaction costs are typically lower than that in the significant division. A demat account also helps avoid problems typically associated with corporal share certificates. I.e. delivery failures caused by signature difference, postal delays and loss of official document during transfer.

Demat account holders also stay away from stamp duty filling up of transfer performance. The major advantage of having demat account is that you don't have to pay for stamp since these are repeatedly stored which reduces the transaction cost.

Demat account is a secure and suitable means of investment securities just like a bank account is for funds. At present, almost 99% settlement (of shares) takes place on demat mode only. As a result, it is appropriate to have a Beneficiary Owner (BO) account to trade at the exchanges.

WHAT IS A TRADING ACCOUNT?

At the same time as a company lists on the stock market, its shares become available for trading on the stock exchange this way, and all trades were conducted automatically. Simply, you didn’t have to go to the counter and put an order actually. You could do it through a computer, which would confirm the details, the market price, and process the trade. In favor of this reason, you want to a special account through which you can perform transactions. This is called the trading account. Without one, you cannot trade in the stock markets. You register for a trading account with a stock broker or a firm. Each one account comes with an exceptional trading ID, which is used for conducting transactions.

Services offered by Demat account
The shares bought and sold by you are view in your demat account. Any shares you are holding in document form can also be dematerialized and managed by the way of electronic tribute in your demat account. Just, stock exchanges have facilitated purchase and sale of mutual fund schemes on the exchange. The DP, at usual intervals, provides you with an account statement viewing the stability of shares in your demat account and transactions during a period. DPs also suggest many services such as electronic agreement of trades in stock exchanges securities against bank loans, suggestion facility for demat accounts, etc. Also Read Here