In the stock market, for a trader to have a demat and a trading account is much required. With the modernization of market and introduction of technology, the regulators have changed the norms that are bound to be followed by all the concerned parties in the share market. One of these norms is to have a Demat account as nowadays the shares are allotted in a dematerialized form only,and no physical shares are provided.
The opening of Demat accounts became popular in the year 1996. Before that, the shares were recorded physically. However, the physical documents could be manipulated easily,so the demat accounts were introduced to maintain a clear record. It made the entire process of monitoring, holding, trade, and investing convenient and fast.
Features of Demat account
Here are given some of the features of demat account:
- Easy Transfer of Shares:
Whenever investors buy or sell any share, they are given a receipt DIS or RIS. These slips are useful as they provide all the details of the transaction and keep the details transparent.
- Faster Re-materialization and Dematerialization of Securities:
The account holders can readily convert the physical certificates to anelectronic form or vice-versa. Thus, it is a convenient way of storing details.
- Assured facility to avail loan:
Many lenders provide the investor’s loan against the securities stored in the demat account. Similarly, the investors can also avail loans to other traders.
- Blocking Demat accounts:
The demat accounts of the investors can be blocked for some time if required. This is a very useful feature as the account holder can freeze the unexpected credit and debit in his account. The best demat account in India also avails the facility of freezing some securities in the account.
- Multiple Accesses:
As the demat accounts are controlled electronically, they can be accessed using several modes. They can be controlled through smartphones, laptops, or some other device.
- Speedy E-Facility:
One of the distinguishing features of thedemat account is that the instruction slips can be deposited electronically to the DP. This makes the process of transfer quite convenient and saves a lot of time.
- Corporate Benefits and Actions:
The company offers the demat account holders some extra features like issues some bonus, stock split, right shares. All these features are updated automatically in the account of the traders.
Benefits to the Company:
The account helps in the cost reduction of issues like printing and distribution. Moreover, the efficiency of registrars and transfer agents is also boosted. This provides better communication between the staff and services are delivered on time to the investors and the stockholders.
Benefits to the Investors:
This system also minimizes the risk of loss, theft, forgery, mutilation, etc. of the physical documents. The transfers are done without any delay and communication between the investors is quicker. The bad delivery problems are also kept at bay.
Benefits to the Brokers:
This depository system also reduces the risk of deferred settlement. Moreover, greater profit in trading is also ensured. Forgery and bad delivery can also be avoided.