Stock market Demat Account is an account that is used to hold shares and securities in electronic format. The full form of the Demat account is a dematerialized account. A Demat account allows investors to hold their shares in an electronic form. It is a replacement for holding and trading in physical share certificates, which involves a lot of paperwork. As most of the transactions are now online, an investor can trade conveniently with the Demat account.
NSDL Demat Account
What is an NSDL Demat Account?
National Securities Depository Limited (NSDL) is a financial organization created to hold securities for stock market. Such as bonds, shares in the form of physical or non-physical certificates.
It holds these securities in depository accounts such as funds held in bank accounts. Additionally, It facilitates the prompt transfer of securities as it transfers ownership through book entries.
Moreover, NSDL is promoted by the Industrial Development Bank of India (IDBI), Unit Trust of India (UTI), and National Stock Exchange (NSE). The principal shareholders of NSDL are as follows –
Services offered by NSDL
Broadly, the operations undertaken are grouped under three sections, as listed below:
- Value-Added Services
- Basic services
- Market Transfer
- Inter-depository transfer
- Corporate Actions
E-Services Of NSDL
NSDL offers the following online services to help players of various stature. That they conduct their business better in the Indian financial market.
A delightful play on the word ‘Speedy’, NSDL launched this service as of September 2001. SPEED-e is intended as the medium to help the quick turnaround of delivery instructions. As member Demat account holders can directly upload such instructions on the SPEED-e website.
Short for ‘Internet-Based Demat Account Statement’. IDeAS helps a Demat account holder view the balances and transactions of their Demat account. These updates happen instantly, with a maximum delay of 30 minutes.
|This service is basically launched for contract notes.|
|Through this service, brokers can electronically deliver/submit contract notes to custodians/ fund managers|
|Brokers have to transmit digitally signed trade information with encryption.|
|It also allows the recipient to enhance or change contract notes.|
CDSL Demat Account
About CDSL Demat Account
Central Depository Services Limited (CDSL) is a depository service that works for the Bombay Stock Exchange (BSE).
It is promoted by the State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, and more.
The DP is a CDSL-authorized agent who serves as a link between the account holder or Beneficial Owner (BO). The issuing company, CDSL, the BO’s broker and the Stock Exchange.
|Full-Form||Central Depository Securities Limited|
|Promoters||HDFC, SBI, BOI, BOB, etc.|
|Operating Market||Bombay Stock Exchange (BSE)|
|# Demat Account||1.1 Crore Approx|
Features of CDSL Demat Account
The main Features of CDSL is to hold the securities in certificated or in uncertificated form. It helps to overcome the problem to register the trades in the books. And only transfers of securities up to 500 shares in physical form. Most of the traders have adopted the form of holding the securities in electronic format for trading.
Advantages of CDSL Demat Account
- As the share certificates are in an electronic format, the investor is safe from the risk of theft, loss or damage to the physical share certificates.
- The securities are immediately transferred to the investor’s account as soon as the payment is transferred to the company’s account. There is no need for the investor to wait for the registration process from the company or its Registrar.
- The stock exchanges follow the method of the T+2 rolling settlement cycle, i.e. settlement of trades is done on the 2nd working day from the trade.
- No stamp duty is applicable for investors when transferring securities in dematerialized format.
- Companies can directly credit their investor’s accounts in case of a bonus issue or rights issue of shares.
CDSL Demat Account App Login
CDSL App is one of the best mobile trading apps in the country. It provides multiple features like Buy, Sells, Short Sell, Stop Loss, Trigger & many advanced features like Watchlist, Graphical Analysis of each stock, Portfolio & more.
Here we will go through Login Process now –
- Open a Demat Account with CDSL, then you will receive your client id & password
- Download the App from Play Store or App Store, as per your mobile OS
- Launch the App & input your details like your client id & password
Difference Between Demat Account and Trading Account
Demat is simply an account that allows you to hold your shares in an electronic format. A Demat account converts the physical shares into an electronic form. On opening a Demat account, it will give you a Demat account number to be able to electronically settle your trades
A trading account is a unique account that allows you to conduct trading transactions in the stock market. It acts as a link between your Demat account and your bank account. However, the Demat account is the one that holds your securities. So, whenever you want to buy or sell shares in the stock market, the transaction will take place through your trading account.
You can get such an account by registering with a firm or a stockbroker. With this account, you are assigned a unique trading ID which grants you access to conduct trading transactions.
Difference Between Demat Account and Trading:
Although a Demat account and a Trading account have two different purposes, they are closely related. In fact, your actual stock market activity is a close interplay between your Trading account, Demat account, and your bank account.
Nature of Demat & Trading accounts (stock vs. flow)
The fundamental difference is that a Trading account captures your capital market transactions over a period of time. Whereas a Demat account maintains the holding of shares and other securities at a point in time. Therefore, a Trading account is in the nature of flow of transactions over a period of time. Whereas a Demat account actually captures your wealth effect at a single point in time.
Functionality of a Demat Vs a Trading Account
One major difference between the two accounts pertains to the functions each performs. A trading account is used for the buying and selling of the securities. By means of it getting debited from your Demat account and sold in the market.
A Demat account, on the other hand, allows investors to keep their financial instruments in an electronic format. This also works in a way where you can change your electronic format securities into physical form as well.
Suitability of Demat & Trading Account
Demat account is suitable for investors who prefer to hold stocks as a long-term investment. Trading account is suitable for traders who prefer transactions over a short period of time.
Role of Demat and Trading Account
The Demat account is generally used for holding securities, not for transactions. The trading account is mainly used for the purpose of buying & selling securities.
How to open a Demat Account:
You can open a Demat Account following these simple steps:
Step1: Get in touch with an agent of depository or a depository participant to fill the form required for opening a Demat account. You may access the list of depository participants (DP) on websites of depositories like the Central Depository Services (India) Ltd and National Securities Depository Ltd.
Step 2: Fill the account opening form with copies and documents of ID and address proof.
Step 3: Sign an agreement with the DP that outlines the details of your rights and duties as an investor and DP. Remember that you have the right to receive a copy of the agreement and the schedule of related charges for your reference.
Step 4: The DP will open your account and give you a Demat account number, also known as Beneficial Owner Identification Number.
How to open a Trading Account:
Opening a Trading Account is made simple in the form of the following process:
1: Begin with selecting a Broker or a firm
2: Make sure to make a comparative study of the brokerage rates and the services included
3: Contact the shortlisted broker for opening your account
4: Fill an account opening form that also requires you to provide KYC details. Along with your ID and address proof submit these.
5: Undergo an application verification process
6: Get the details of your trading account
7: Start Trading
Benefits of Demat Account
- Less Paperwork
- Safe and Secure
- Reduces Cost
- Instant Transactions
A Demat account and trading account may be different, but both of them are necessary when you want to invest in stocks. The growth of technology in the stock market means you can now open both a Demat account and a trading account easily and quickly.