Demat Accounts

A Demat (Dematerialized) account is an electronic account that holds your securities in digital format, eliminating the need for physical share certificates. Evolution of Share Trading: • Earlier: Physical share certificates • Problems: Theft, damage, forgery, transfer delays • Solution: Dematerialization in 1996 • Current: 99%+ trades happen in demat form Key Features: • Electronic storage of securities • Instant transfer of shares • No risk of physical damage or loss • Easy tracking and management • Integrated with trading accounts Types of Securities Held: • Equity shares of companies • Government and corporate bonds • Mutual fund units • Exchange Traded Funds (ETFs) • Initial Public Offerings (IPOs) Demat vs Physical Shares: • Speed: Instant vs weeks for transfer • Safety: No theft/damage risk • Cost: Lower transaction costs • Convenience: Online management • Liquidity: Immediate selling possible Legal Framework: • Regulated by SEBI (Securities and Exchange Board of India) • Depositories Act, 1996 • Two main depositories: NSDL and CDSL • Depository Participants (DPs) provide services