easystockmarket.blogspot.com
Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed by the Government of India in 1992 with its head office at Mumbai. Its one of the function is helping the business in stock exchanges and any other securities markets.
Demat (short form of Dematerialization) is the process by which an investor can get shares (also called as physical certificates) converted into electronic form maintained in an Account with the Depository Participant (DP).
DP could be organizations involved in the business of providing financial services like banks, brokers, financial institutions etc. DP’s are like agents of Depository.
Depository is an organization responsible to maintain investor's securities (securities can be shares or any other form of investments) in the electronic form. In India there are two such organizations called NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services India Ltd.)
Investor’s wishing to open Demat Account has to go DP and open the account.
Opening the Demat account is as simple as opening the bank account with any bank. As you need bank account to save your money, make cheque payments etc, likewise you need to open a demat account if you want to buy or sell stocks.
Opening the Demat account is as simple as opening the bank account with any bank. As you need bank account to save your money, make cheque payments etc, likewise you need to open a demat account if you want to buy or sell stocks.
All shares what you possess will show in your demat account.
So you don't have to possess any physical certificates. They are all held electronically in your demat account. As you buy and sell the shares, accordingly your shares will get adjusted in your account.
Is a demat account a must?
The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the demat account if you want to buy and sell shares.
So a demat account is a must for trading and investing.
How to start to open a Demat account?
You have to approach a DP to open a Demat account.
Most banks are DP participants so you may approach them.
To have latest list of registered DP please visit websites www.nsdl.co.in and www.cdslindia.com.
A broker and a DP are two different people. A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers..
Most banks are DP participants so you may approach them.
To have latest list of registered DP please visit websites www.nsdl.co.in and www.cdslindia.com.
A broker and a DP are two different people. A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers..
Following are the documents required to open Demat account.
When you approach any DP, you will be guided through the formalities of opening an account.
The DP will ask to provide some documents as proof of your identity and address.
Below is a list but you may not require all of them.
The DP will ask to provide some documents as proof of your identity and address.
Below is a list but you may not require all of them.
PAN card, Voter's ID, Passport, Ration card, Driver's license, Photo credit card Employee ID card, IT Returns, Electricity/ Landline phone bill etc
Do you need any shares to open a Demat account?
No. You need not need any shares to open a demat account. A demat account can be opened with no balance of shares. And there is no minimum balance to be maintained either. You can have a zero balance in your account.
How much it cost to open a Demat account?
The charges for account opening, annual account maintenance fees and transaction charges vary between various DP’s. To have latest charges please visit websites of www.nsdl.co.in and www.cdslindia.com
Finally –
After successfully opening the demat account, the DP will allot “Beneficial Owner Identification” Number, which will be needed to mention for all your future transactions. If you want to sell your shares, you need to place an order with your broker and give a 'Delivery Instruction' to your DP.
The DP will debit your account with the number of shares sold. You will receive the payment from your broker.
If you want to buy shares, inform your broker about your Depository Account Number, so that the shares bought are credited into your account.
The DP will debit your account with the number of shares sold. You will receive the payment from your broker.
If you want to buy shares, inform your broker about your Depository Account Number, so that the shares bought are credited into your account.
This post first appeared on Indian Stock Market Basics. Stock Market Tutorial., please read the originial post: here
