Saturday, 9 April 2011

Demat account

Nowadays, practically all trades have to be settled in demat form. Although the market regulator, SEBI, has allowed trades of up to 500 shares to be settled in physical form, nobody wants physical shares any more. So a demat account is a must for trading and investing in the Indian share market.options trading provide a way to open in demat account.

A demat account is just like a bank account where actual money is replaced by shares. You have to approach the DPs (Depositary Participants), to open your demat account. Let's say your portfolio of shares looks like this: 250 of Reliance, 150 of ITC, 100 of TCS and 50 of Maruti. All these will show in your demat account. You don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your demat account. As you buy and sell the shares, they are adjusted in your demat account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions

Opening a demat account for trading in the Indian share market is as simple as opening a savings bank account. You have to approach a Depository Participant (DP) to open a Demat account. Most banks and share brokers that offer share tips,stock tips and trading services are DPs.



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