The first and foremost step for trading in the stock market is the opening of a DEMAT account. Securities and Exchange Board of India (SEBI) has made it mandatory for every trader and investor to have a DEMAT account where securities can be kept in dematerialized form after the Depositories Act of 1996.
DEMAT accounts can be opened through almost all nationalized banks as well as brokers. Different DEMAT accounts are required for all the exchanges, so the first step is to decide the exchange you would like to trade. NSE and BSE are the two most prominent stock exchanges in India.
Each exchange has an individual depository where a DEMAT account is opened. You cannot directly approach a depository, and is thus, the opening of a DEMAT account is generally done either through your bank or broker. The purpose of a DEMAT account or dematerialized account is to store the securities which are bought from the market by the investor in dematerialized form.
There are two main depositories in the Indian market, the National Security Depository Limited (NSDL) and the Central Depository Service Limited (CDSL), which serve as the depositories for NSE and BSE, respectively. SEBI has made it mandatory to have a DEMAT account before trading in the stock market.
Table of Content
The best Demat Account providers of India
5 paisa
Zerodha
Upstox
Sharekhan
Motilal Oswal
ICICI Direct
HDFC securities
Some Of the DEMAT account providers in India are as follows:
1. 5 Paisa
5 paisa is a discount broker, which charges one of the lowest discount brokers' lowest brokerage charges. It is promoted by IIFL, a premier NBFC based in India, established more than two decades back.
There are no upfront charges for opening a Demat account, but a maintenance charge of INR 45 per month is charged.
2. Zerodha
Based in Bangalore, Karnataka, Zerodha was the one who introduced the concept of discount brokerage in India, which made them one of the largest brokers in the country. The advantage with Zerodha is that they do not charge any brokerage on delivery-based trades. In contrast, a fixed charge of INR 20 is charged for all executed orders of intraday and derivatives trading.
The Demat account opening process is paperless and can be performed online very easily in less than 15 minutes. There are no account opening charges, but an annual maintenance charge for Demat is charged second year onwards.
3. Upstox
The main competitor of Zerodha working on the same concept of discount brokerage is Mumbai-based Upstox. It was initially known as RKSV securities, and the brokerage plans are mostly identical to those of Zerodha. Demat accounts can be opened online, and there are no charges for account opening. However, an annual maintenance charge of a nominal 150 INR is applicable for the second year onwards.
4. Sharekhan
Established in 2000, it is one of the premium brokers of India. ShareKhan has a customer base of over 16 lakhs with a spread across all the towns and cities of India. BNP Paribas group acquired SHareKhan in 2016 for INR 2200 Crores. They charge a minimum brokerage of 10 paise per share.
There are no Demat opening charges charged by ShareKhan, whereas a fixed Demat maintenance charge of INR 400 is charged from the second year.
5. Motilal Oswal
A very prestigious name in the Indian stock market, Motilal Oswal, was established in 1987. They provide multiple services, including Demat accounts, portfolio management, home finance, investment banking, etc. They have a clientage of over 9 lakhs and are present in over 2200 locations across India. They provide an integrated 3-in-1 account where the trading account, Demat account, and savings account are integrated as 1 unit.
They don’t have any charges for account opening, but an annual maintenance charge of 441 is charged towards all Demat account holders from the second year onwards.
6. ICICI direct
ICICI direct is a familiar name because it was the one that popularized the concept of online trading in India. They used to be the largest stockbrokers of India until Zerodha overtook them. They have a client base of over 20 lakhs and have been one of the most expensive stockbrokers in India.
They charge an account opening fee of 975 and an annual maintenance charge of INR 700 annually from the first year itself.
7. HDFC Securities
Established as a brokerage division of India's largest public sector bank – HDFC, it was established in the year 2000. They serve over 17 lakh customers from over 185 locations in India, with a branch count of over 2500. HDFC holds a good reputation in the banking sector, and the same is utilized by HDFC securities.
They charge a trading account opening fee of INR 999 and Demat account maintenance charges of INR 750 annually from the first year.
These are few Demat account providers of India; there are much more such as HDFC securities, Indira securities, Angel Broking, etc., which offer good service at competitive rates.
The DEMAT account is nowhere involved in the monetary transactions in case of any market or market segment. The sole purpose of a DEMAT account is to store all the securities and instruments in the dematerialized form in one place. The DEMAT account can never hold any money, and all the money-related transactions are usually processed directly from the trading account.
You can have a total value associated with your DEMAT account in some cases, which is actually the total value of all your securities stored in that account and does not mean any cash balance in your DEMAT. All profits and losses associated with trading are directly settled to your trading account, from where they can be transferred to your bank account as per your need.
Conclusion
The inception of DEMAT accounts has transformed the stock market trading experience by making the clearing and settlement process reliable and fast. A common myth associated with DEMAT is that there needs to be a certain amount of cash funds in your DEMAT for trading, which is incorrect. DEMAT accounts can hold and store nothing apart from dematerialized securities. It is necessary to brush up on your basic concepts before starting trading and investing in the market. It is better to take services from a certified investment advisor if you don’t have experience with basic terminology.
You must be logged in to post a comment.