What is Mean By Demat Account y it is need for ShareMarket?

Question

What is Mean By Demat Account y it is need for ShareMarket?

Answer 1

yes.demat account is used for online trading,and share market.

Answer 2

Demat refers to a dematerialised account.

Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, you need to open a demat account if you want to buy or sell stocks.

So it is just like a bank account where actual money is replaced by shares.

You have to approach the DPs (remember, they are like bank branches), to open your demat account.

Let's say your portfolio of shares looks like this: 40 of Infosys, 25 of Wipro, 45 of HLL and 100 of ACC.

All these will show in your demat account.

So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account.

As you buy and sell the shares, they are adjusted in your account.

Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions

Answer 3

De mat account has become a necessity for all categories of investors for the following reasons/ benefits:



SEBI has made it compulsory for trades in almost all scrips to be settled in De mat mode. Although, trades up to 500 shares can be settled in physical form, physical settlement is virtually not taking place for the apprehension of bad delivery on account of mismatch of signatures, forgery of signatures, fake certificates, etc.



It is a safe and convenient way to hold securities compared to holding securities in physical form..



No stamp duty is levied on transfer of securities held in De mat form.



Instantaneous transfer of securities enhances liquidity.



It eliminates delays, thefts, interceptions and subsequent misuse of certificates.



Change of name, address, registration of power of attorney, deletion of deceased's name, etc. - can be effected across companies by one single instruction to the DP.



Each share is a market lot for the purpose of transactions - so no odd lot problem.



Any number of securities can be transferred/delivered with one delivery order. Therefore, paperwork and signing of multiple transfer forms is done away with.



It facilitates taking advances against securities on low margin/low interest.