What is a demat account

           Dematerialized account is abbreviated as demat account. In india exclusively, every individual trader/investor must possess an account in order to trade in the stock market as per Securities Exchange Board of India (SEBI). This account serves many purposes out of which the key is that the securities and shares are help in virtual format instead of physical certificates. This avoids many confusions and bottlenecks in the stock market for every investor. An account is opened with an exchange broker normally called as broking firms. If traded in physical format, every transaction penalises 0.5% stamp duty which was avoided by demat account system. Every account has a unique ID with a password into which the securities are deposited. Demat account offers innumerable benefits as follows:

• Quick clearance and settlement
• Avoids confusion in the ownership of securities
• Easy allotment of IPO
• Holding of shares are very convenient and easy
• Securities can be transferred easily
• Elimination of paperwork
• Elimination of mid-brokers
• Certificate thefts can be avoided
• Conversion of shares and money is easy
• Risk involvement is almost eliminated

Apart from the above advantages to the investors, broking firms too enjoy many benefits such as elimination of time delay, paperwork and useless settlement issues