A demat Account is the first step if you want to start trading online.Demat account lets you trade in shares and debentures in the electronic format and you do not get physical certificates for the shares you own. Instead they are held electronically in the demat account.
Advantages of Demat Account
- Acts as a centralized account. Investor can hold all the different investment vehicles in a single place (demat account) eg. stocks,Bonds,Gold ETF,IPO
- Enables quick ownership of securities/stocks.
- No worry of loss due to theft or damage of stock certificates.
- Increased liquidity of the stocks.
So in today’s scenario you can say that demat account is a must for trading and investing in the stock market.
The parties involved in a demat account are
Depository Participant – Market Intermediary through whom you avail the Services. These are usually Banks or financial organizations. Some of the examples are –Sharekhan,ICICI,HDFC in India.
Investor – That is you
Depository –Which holds stocks in electronic format.In india these services are provided by two organizations –CDSL,NSDL.
For more details Demat Account and procedure to open a demat account you can refer to – Steps Involved in opening Demat Account