With the introduction of new technologies trading in the stock market has changed a lot. Earlier when BSE was formed in 1875 at that time traders and investors used to stand on floor and shout prices of stocks for buying and selling. The money was exchanged between buyer and seller and a physical copy in the form of certificate was issued to the buyer.The entire process was very time-consuming. In 1996 concept of dematerialization was introduced in share market. Physical copies of shares were replaced by electronic form and were credited and debited from the Demat account of a trader.
Following are the benefits offered by dematerialization :
1)Common bank
In Demat Account along with shares, other financial instruments like bonds can be stored as well. Traders can use the same account to trade in stocks and bonds both.
2)Time and cost
To deliver a physical copy of shares cost is involved and also it takes the time to do so. With dematerialization, this cost and time can be saved.
3)Easy to hold
Earlier traders need to keep a physical copy of shares safely as they are vulnerable to damage and theft. With Demat account, traders need not worry of losing shares as they are safely added to their account and removed when they sell them.
4)Delivery risk
Dematerialization has removed the risk of fake delivery, issue of fake shares and more and reduced a lot of paperwork as well. Once your trade is approved, shares you have purchased will be automatically added to your account.
Following process has to be followed to open demat account:
1) Select depository participant as there are various Dps with whom you can open your Demat account.Identify with whom you want to open your account. With Pehla Trade, traders can open their Demat account for free of cost in very less time.
2)Fill up the account opening form and submit it along with required documents like pan card, passport size photograph, and address proof.Once the form is verified you will be provided with a copy of rules and regulations and other charges details.
3)After your application is processed the DP will provide an account number which will be unique. Using this number you can access your account online.
These are few quick steps which are to be followed for opening account. There are no minimum number of shares required to open an account.Also, no minimum balance is required to be maintained. As a Demat account holder, you need to pay charges like annual maintenance fees, transaction fees and more. These charges differ from different service providers.
