Most financial institutions require you to open an account before using their services or products. This is true for the share market too. You have to set up a new account before you can start trading. When you open an account with a bank, you can deposit money. Then you are able to keep track of your transactions with the help of your account number. Similarly, a demat account stores details of all your investments in shares and securities. You can access these details easily while trading by using your client ID.
When you open a demat account with any of the depository participants or your brokerage agency, you will get an account number. This is the demat account number. It is a unique number that is used to identify a particular client and to keep track of all their assets. But this is not your client ID. What is client ID in a Demat Account then?
Read more: What is DP ID in demat account?
A client ID is a unique eight-digit number generated by the depository participants to easily identify their clients. This number is generated by using the in-house formula of your chosen brokerage house. It is not influenced in any way by the depositories. This client ID number is used to tie up all their services to the specific client. You can use this number to track your investment history.
There are two depositories working in India that regulate and control how the depository participants operate. The two depositories are the National Securities Depository Limited (NSDL) and the Central Depository Service (India) Limited (CDSL). The depository participants are required to register their services with any one of these depositors. After registration, these depository participants are issued their depository ID or DP ID. A DP ID is an eight-digit number that is unique for each depository participant.
The two depositories—NSDL and CDSL—follow two different formats for issuing the DP IDs. CDSL DP IDs are issued in a numeric format while the NSDL DP IDs are issued in an alphanumeric format. For example, a CDSL-issued DP ID could look like this: 12400023. Meanwhile, an NSDL-issued DP ID could look like this: IN005485. This also helps users to know at a glance which depository their depository participants are tied up with.
Read more: What is collateral amount in demat account?
The demat account number or demat ID is a 16-digit number. This number actually has two parts to it, being a combination of the DP ID of the broker and the client ID of the user. The first part is the DP ID while the second part is the client ID. This process helps you identify a specific user under a particular brokerage agency.
All clients under a particular brokerage agency will have the same first eight numbers in their demat accounts. But their Client IDs will be unique for each of them.
As a client, the DP ID is of no importance to you. But your client ID helps you track all your investments and returns.
If you have to change your depository participant for any reason, you might have to open a new demat account as well. That will be applicable if the depositories are different and the DP ID will be different for NSDL and CDSL. In such cases, you will have a new client ID for your new account.
Read more:Types of demat account
A demat account helps you process and store information about the shares and securities you have bought. The online storage of information makes the entire process of trading pretty seamless.
Earlier, people had to submit extensive paperwork for each trade they engaged in. The number of shares each person could own was also limited. With the introduction of demat accounts, all these issues are now history.
It is important that you understand the basics before you start your investment journey. Opening a demat account is easy enough. Once you set up the account, identify the client ID in your demat account number. This will help you as you commence trading and investment in the financial markets.
Read more: How to convert physical shares to demat
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