Trading And Demat Account

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All About Demat Account

• LKPSecurities

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What is the procedure for opening a Demat Account?

• A demat account is, in a way, like a bank
  account. Just as you hold your cash
• balances in your bank account, you hold equity
  shares and other securities in your
• demat account. In the past (prior to 1997) shares
  were held in physical form (share
• certificates). Once these physical shares are
  dematerialized, they can be held in a
• demat account. No worries about bad delivery,
  losing your share certificates,
• signature mismatch, storing your share
  certificates etc. Nowadays, all share
• purchases and sales are done only in the demat
  mode (i.e. debit or credit to your
• demat account). But, first let us look at the
  procedure to open a demat account.

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Procedure to open a demat account

• To open a demat account you must approach your
  Depository Participant (DP) . The DP
• could be your broker or a bank. While you will
  open your demat account with the DP,
• the actual shares will be held in custody by one
  of the depositories (CDSL or NSDL).
• These are institutions sponsored by large
  institutions with government participation and
• hence you are assured of safety and security.

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Procedure to open a demat account

• The next step is to submit your KYC (Know your
  Client) documents. Along with filling
• the Account Opening form and filling all the
  details, you will also be required to submit
• copies of your passport sized photographs and
  your PAN card. Additional, you need to
• furnish one proof of identity and one proof of
  your current residential address. The KYC
• form has the DP-Investor agreement, which lays
  out the rules and regulations and your
• rights and obligations. Do read the fine print in
  detail.

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Procedure to open a demat account

• At the third stage, most DPs will insist on an
  in-person-verification (IVP). Either you can
• personally visit the centre or the representative
  will visit your place. Some brokers
• permit IVP over the web cam, although most
  brokers still insist on IVP.
• The last step is the allocation of the
  Beneficiary ID (demat account number) once all
  the
• documents are in place and verified. The DP id
  and the Beneficiary id combined
• becomes your unique DP code for all future
  transactions, IPO applications etc. Demat
• account can only hold shares in custody and you
  still need a trading account with a
• broker to buy and sell shares.

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Thank You

• lkpsecurities