An account that is used to hold shares and securities in electronic format is called a Demat account. The full form of the Demat account is a dematerialized account. During online trading, the purpose of a Demat account is to hold shares that have been bought or dematerialized (converted from physical to electronic shares), thus making share trading easy for the users. In India, the Demat account service is provided by depositories such as NSDL and CDSL through intermediaries / Depository Participant / Stock Broker such as HENSEX securities. The charges of Demat account vary as per the volume held in the account, type subscribed, and the terms and conditions laid by the depository and the stockbroker.
What is dematerialization?
Dematerialization is the process of converting the physical share certificates into electronic form, which is a lot easier to maintain and is accessible from anywhere throughout the world. An investor who wants to trade online needs to open a Demat with a Depository Participant (DP). The purpose of dematerialization is to eliminate the need for the investor to hold physical share certificates and facilitating a seamless tracking and monitoring of holdings.
What is Demat account?
Demat Account or dematerialized account provides the facility of holding shares and securities in electronic format. During online trading, shares are bought and held in a Demat account, thus facilitating easy trade for the users. A Demat Account holds all the investments an individual makes in shares, government securities, exchange-traded funds, bonds and mutual funds in one place.