There are varied sorts of accounts and there is a reason that they are there. Have you ever used an account named Demat Account? Do you know what is this account for? Well, in the conventional time, the stock markets worked as open-cry platforms wherein the traders shouted for purchasing and vending orders. Moreover, cash used to get exchanged for physical share certificates and it ended up in extensive paperwork. It even led to lengthy settlement times, hence making the entire procedure unwieldy.
The rise of technology altered this trading system when dematerialization was launched in the year 1995. In such a process, physical certificates were transformed to the same number of electronic securities and got credited to the investors’ demat accounts. You could be thinking what really is a demat account. In simple words, dematerialization (demat) accounts are quite similar to bank accounts and get used to hold all your shares in an electronic arrangement. In addition to the shares, you could even hold other investment products such as government securities, exchange-traded funds (its), bonds and mutual funds. If you wish to do trading in the realm of stock market then it is mandatory that you have a demat account. You must look for the Best Demat Account to ensure that you get the best experience.
How Can You Open this Account?
Choose a Depository Participant (DP)
There are two main service providers known as the central depository (CD) and depository participants. Dips are intermediaries between you and the CDs. Banks, brokers, and other financial institutions mostly play the role of a DP. You might select one of these service providers to open a demat account.
Deposit the Application Form along with Required Documents
You must submit a duly completed demat opening application form blended with the essential documents and photographs. The chief documents that is required for opening an account include a photo identity and residential proof. Original documents are going to be needed for verification.
The DP is going to get you an agreement having all the terms and conditions blended with the applicable charges. A personal verification wherein a representative is going to connect with you for verifying all the details is accepted.
Open Your Account
On successfully verifying the data, the DP is going to cater an account number or a unique client ID. These specifications will be demanded to access your demat account. For maintaining and operating the demat account, you need to experience certain fees and charges. These encompass annual maintenance and also transaction fees. It is better if you check these charges before going ahead with the procedure of application. To buy and sell shares on the stock exchange, you will need opening a trading account along with a brokerage firm. These companies levy brokerage charges and it may be based on per transaction or even that of associated with the transaction value subject to a particular minimum amount.
So, since you know the basics of demat account now, make sure that you make the best choice for your account.