By Rahul Sheth - 91

Jimit Soni - 102

An Introduction to Demat Accounts

What is a DEMAT Account

DEMAT refers to dematerialized a/c

DEMAT account is mandatory for trading and investing of shares

It is similar to a bank a/c where actual money is replaced by shares

How to Open ???

Demat a/c can be opened with Depository Participant (DP) who will provide official procedure to open an account.

The DP is an intermediary between the Depository & the Investor

There are two depositories National Securities Depository Limited (NSDL)Central Depository Services Limited (CDSL)

DP & its Role

Is Demat Account necessary ???

As per the Securities & Exchange Board of India (SEBI) guidelines all trades have to be settled in dematerialized form only

Although SEBI has allowed trades of up to 500 shares to be settled in physical form

Hence, if you want to buy and sell shares through the stock exchange, you necessarily have to have a demat account.

Benefits

It allows immediate transfer of securities

No stamp duty required

Purchase ,hold and sell shares in electronic form

Elimination of risks such as Bad delivery, loss of certificates, delay & theft

Benefits … contd

Shares can be credit / debited automatically You can even buy / sell single a share

Auto Credit of Rights / Bonus / Public Issues / Dividend credit through ECS

Auto Credit of Public Issue refunds to the bank account

Documentation Process

Need to fill demat request form  One or two Passport size photograph, Proof of address like Voter ID card Electricity bill / Ration Card Employee ID Card Bank attestation Latest IT Return Passport in case of NRI PAN Card as a proof of identity As of April 2006 it is mandatory, Without a PAN CARD you are not be eligible

to open a Demat account

Finally in 7 working days DEMAT A/c gets opened for trading after detailed verification

Who all can avail Demat Account

Indian Citizen(individual / joint or by a minor)

Min 18 yrs or can have a joint a/c in case of a minor

HUF All sorts of the proofs of the KARTA of that

HUF

NRI All sorts of information from foreign & host

country

How does it work…..?

When you buy shares, the broker credits your demat account with the shares and these are reflected in your statement of holdings. if you are trading through an internet based platform, you can view your holdings online. Typically the broker credits the shares on T+2

When you sell the shares, you need to give your broker a delivery instruction note, where in you fill the various details of the stock sold. Your account is debited with the shares and you are then paid the money for the shares sold. If you are trading through the internet, the account will automatically reflect a debit of the shares and amount credit to your account.

The Two Depositories

Like there are two main Stock Exchanges, the NSE & BSE, there are also two set-ups handling Demat Account services called NSDL and CSDL

Depending on where a particular security is listed/traded, it is handled by the concerned set-up, both in case it is listed/traded on both exchanges.

NSDL is the largest depository of Indian stocks

Trades done is NSE are linked directly to NSDL

Trades done is BSE are linked directly to CDSL.

Charges & Advantages of Share khan A/c opening AMC Intraday

brokerageDelivery

Brokerage

120 450(1st yr free) Higher of 10 p per share or 0.10% of transaction value

Higher of 50 p per share or 0.50% of transaction value

•Sharekhan offers different trading platform to suite customer requirement. This includes online browser based trading, Installable terminal, mobile, call & trade and in-person trade though branch offices.•Sharekhan offers online and classroom training, seminars and workshops to investors. •Sharekhan has India-wide network of branches & low brokerage charges•You can surly find a Sharekhan in your neighborhood•Call & Trade facility is free with Sharekhan•People prefers this also due to their personal relations & word of mouth

Charges & Advantages of Axis Direct

A/c opening AMC Intraday brokerage

Delivery Brokerage

999 500 Higher of 5 p per share or .10% of transaction value

Higher of 50 p per share or .50% of

transaction value •Axis direct also offers trading platform to suite customer requirement. This includes online browser based trading, Installable terminal, mobile, call & trade and in-person trade though branch offices.•It being a subsidiary of Axis bank it provides 3 in 1 a/c which brokers can’t•Funds can be transferred from other bank a/c’s via net banking in case of shortage•Already has a huge customer base of CASA •Good Brand Image •Special Relationship managers assigned for Privileged / HNI clients

Other Banks’ & Broker’s chargers

Banks A/c opening AMC Intraday brokerage

Delivery Brokerage

HDFC securities

799 825 Higher of 25 rs or 0.10% of

trans value

Higher of 25 rs or 0.50% of

trans value

ICICI direct 975 500/450 0.0275 % of trans value

0.55% of trans value

Broking Firms

A/c opening AMC Intraday brokerage

Delivery Brokerage

Motilal Oswal

Securities

500 450 0.03 % of trans value

or 0.30% of trans value

Angel Broking

- 500/450 .0275 % of trans value

.55% of trans value

Qualified CDSL DP’s

Axis Bank Bank of India Geojit BNP Paribas Financial Services HDFC Bank IL&FS Securities Services India Infoline Motilal Oswal Securities Reliance Securities Sharekhan

Qualified NSDL DP’s

Axis Bank Barclays Securities (India) BNP Paribas Citigroup Global Markets India Geojit BNP Paribas Financial Services HDFC Bank HSBC ICICI Bank IL&FS Securities Services India Infoline Interactive Brokers (India) Kotak Securities Sharekhan -

Demo links

http://home.axisdirect.co.in/dynamicWEB/demo/TradingUser/easy_2_1.html

http://www.sharekhan.com/tradetigernew/Demo/demopage.html