Must read before Opening Demat and Trading account online: Indian stock markets are almost trading near the all-time high. The indices are continuously touching a record high as there are both institutional as well as retail participation in the markets. During the pandemic period, we have seen the maximum opening Demat and Trading accounts. The penetration of the equity markets reached smaller cities in the last year. The lockdown and covid-19 restrictions forced people to stay home and participated in the markets.
The availability of opening Demat and Trading accounts online along with high-speed internet mobile apps has propelled many people to participate in the market.
A record of 14.2 million fresh Demat accounts was opened by investors in FY2020-21 in India. The number is triple as compared to the previous year. As per the record in March 2021 alone, 1.9 million Demat accounts were opened which is the highest ever in any month.
What is Demat Account
Demat is the short form of Dematrialision, a Demat account is an account that gives the facility to hold the physical shares into an electronic form. This is just like a bank account where instead of money your physical shares are kept in an electronic form. Earlier investors used to get a physical share certificate after the share was purchased. Now after dematerialization, shares are directly credited into the Demat account.
What is Trading Account
A trading account is an investment account that traders use for purchasing securities and monitor trades. It empowers investors to buy and sell securities such as shares, commodities, forex, etc mainly into the secondary market. The trading account is the primary account for the traders to do regular trading activities. Earlier investors use to go to the Exchange trading floor for any trading activity but now they can trade from anywhere
What is the Difference Between Demat and Trading Account
A Demat account is for holding shares, bonds, mutual funds, ETFs, and other securities whereas a trading account is for buying and selling of shares.
Demat account can be open to holding shares/securities only and may not require a trading account to link with, whereas in the case of a Trading account, a Demat account is mandatory to link for trading in securities particularly in shares.
A Demat account can be open through and Depository Participants (DP) like Banks, Financial Institutions, or Brokers whereas a trading account can be open through Brokers House only.
The procedure of opening Demat and Trading Account Online
There are two depository services in India – Central Depository Services Ltd (CDSL) and National Securities Depository Ltd (NSDL). When you are opening any Demat Account, you are opening either with CDSL or NSDL with whom your Depository Participant is registered. Both the Depository services NSDL and CDSL are providing the same services to the clients. For opening a Demat account you need to approach DP like Bank, Stock Broker, or any Financial Institute having Depository services.
For opening a trading account you need to approach a stockbroker or banks that have stockbroking services. Nowadays all broking houses prefer 2-in-1 accounts ( Demat plus Trading account). Whereas banks are offering 3-in-1 accounts ( Demat, Trading, and Bank account) for seamless trading. For opening 2-in-1 or 3-in-1 accounts below documents are required
- Latest Photograph
- Adhar Card Copy
- PAN Card Copy
- Canceled Cheque
- 6 months bank statement ( in case of future trading)
You can open Free Demat and Trading account here
Earlier it used to take 10-15 days time to open a physical account, but now with the introduction of Digital account opening it hardly takes half an hour to open the account. The in-person verification is also done by the broker through video calling or other digital modes. Some brokers ask for a signature on the blank page for opening Demat and trading accounts online, but in such cases, you need to be very careful of misuse of your signature.
Benefits of Opening Demat and Trading Account Online
The main benefits for opening Trading and Demat account online or paperless are
It’s hassle-free, you need not have to wait long to activate your account. You can open your accounts in half an hour instead of 10-15 days
No need to sign the numbers of physical papers, your digital signatures will be put on every page.
Least chance of error- as the account is opening online, within half an hour, the chances of error becomes minimize.
Can open the Demat and Trading account at your convenient time and place.
3 things that you need to take care of while opening a Trading and Demat account online
You need to be careful if you are giving signatures on the blank page as a digital signature to your Relationship Manager (RM) for opening a paperless account because it can be misuse
Need to confirm the brokerage, Demat account, and other charges before opening a paperless trading account with your RM
Should always open the paperless trading and Demat account under the guidance of your RM because you may stuck midway if you are doing it alone.
Conclusion
Nowadays, the opening of a Demat and Trading account has become easy and hassle-free after introducing paperless or digital account opening procedures. You need to remember the above three points during the time of account opening. You can contact this broker for hassle-free online Demat and Trading account opening. They are a reputed broker and are charging very competitive brokerage and low Demat charges. Their research and trading calls are excellent.
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Happy Investing !!
Editor’s Desk