The Securities and Exchange Board of India (SEBI) has prohibited any transaction for the transfer of securities of listed companies in the form of physical certificates. This has become effective from 5 December 2018. So, investors now need to have a demat account to continue trading.
But what exactly is a demat account? And how does trading through such an account differ from trading through the use of physical share certificates? You can get your answers from this informative report of demat accounts.
Read more: How to open a demat account
‘Demat’ is an abbreviation of the term ‘dematerialised account’. This type of account holds shares and securities in the electronic form. So, investors can buy and sell stock market shares through a demat account without physical share certificates.
Here are the objectives of holding a demat account:
This informative report on demat accounts showcases the following advantages of a demat account:
The disadvantages of demat accounts are as follows:
Read more: Uses of a demat account
India has two depositories— the Central Depository Services Limited (CDSL) and the National Securities Depositories Limited (NSDL). Depository participants hold shares through these depositories. When investors transfer shares, the respective depository participant debits or credits the their demat accounts.
If you are interested in investing, it’s now imperative to have a demat account. You must not feel intimidated by the new system—it is far simpler and safer than ever before. Do not delay and open a demat account today to enjoy the associated advantages.
Read more:Best demat account
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