The share market offers the chance of trading and investment to all those who have valid documents and opened the account with any stockbroker or broking house engaged in the trading activities in the stock market. One needs to provide all the KYC documents as per the requirement of the concerned broker or broking house. Trading in this market is much common these days. More and more people are taking part in trading and investing in the stock market. The reason for such an increase in the participation regarding the stock market is the opportunity to make good returns. Thus, the first question that comes to the mind of a beginner is how to trade here. The answer to this question is known as a demat account. To put it another way, Demat account acts as a means to trade or invest in shares or securities online. Without it, no transaction in shares or securities is possible as it is made mandatory now by the concerned authorities.
Dematerialization is known as the process where the shares in the hard copy are converted into the soft copies. Nowadays the companies only offer the shares in the soft or virtual form, and therefore the authorities have made this account mandatory.
These are the following advantages of using a demat account for trading.
• Eliminates Risk- In the Demat account, all the shares and securities are held in electronic form. There is no paperwork at all. Thus, it reduces different types of risks such as the risk of theft, wrong delivery, etc. In addition, any company related activity like a stock split, bonus, etc. are credited to the demat account.
• Cost Reduction- Demat account helps the companies reduce their cost of printing of shares. There is also no stamp duty charge on shares and securities in dematerialized form. In the past, there were also some charges on the transfer of securities.
• Odd Lot Problem- Before demat account, trading of shares was done in lots. However, after demat account, this problem no more exists. Now the shares can be transacted in any numbers.
• Easy to Hold- Shares and securities are easy to hold in Demat Account. Since this account is used to hold the securities in the soft copy format, it is known as a Demat account. Here one can hold the share certificate as well as certificates of other securities in a virtual format and hence it is known as the demat account. In case of the death of the Demat Account holder, the holdings can be easily transferred in favor of the nominee.
All transactions here are automatically updated. The Best demat account in India holds all the details of the account holders like address, name, time of the transaction, etc. So the companies always have details of all the transactions. The biggest benefit of demat account is that it acts like a bank and holds not only shares in the account but In fact debt instruments like bonds, etc. can be held in a single account. Hence the demat account is much useful to the companies as well as the clients.