Finance / Investments
Procedure To Open A Demat Account
Posted Date: 18-Apr-2012
Investors can make attractive gain through share market. SEBI has arranged strict rules and regulations in order to assure the security. This article deals with all the basic procedures to open a demat account. It also traces all the basic of Indian share market.
Features of Indian share market
Investors can make attractive profits through share market in India. But 95% people in India don’t make a proper use of this attractive method. The unnecessary queries and unawareness related to share market are the major reasons behind such phenomena. India consists of one of the best share marketing system across the world. Share market is in India is not at all risky at present. SEBI, share market regulator of India has arranged most convenient and transparent methods for this. It is not necessary to spare too much time for researching about share market field in order to make profit from that. A team of expert professionals are available to provide maximum profit to the investor. Such professional teams comprise of financial advisors and broking companies are available at every corner of India. Investor may just select a best and credible advisor among them. Such advisors will select shares for you by completing all the basic procedures. They will make investments and also provide profit for you. Investor has to pay a fixed fee for such advisors to their service.
Procedure for retail investors
Indian share market is controlled by SEBI. SEBI has arranged strict rules and regulations in order to make sure the security of investment. Investment in share market can be done only by following such rules and regulations. There are several rules and regulations for retail investors. Individuals are not allowed to invest directly in share market. Investment can be done only with the help of brokers who are registered in exchanges. Investors have to open trading account and depository account with broker. Investment in share market can be done only after starting a demat account with broker.
Role of broker
After selecting the broker investor should confirm them. Investor should fill no your client form in order to confirm the broker. Photo, all necessary information related to investor, Identity cards, pan number etc are necessary for this. Investors have to sign client broker agreement and risk disclosure document for that. Brokers charged fixed fees in order to opening the account. After completing the procedures broker will open an account for the investor.
The account open by the broker is a trading account for the transaction of shares. Investor can buy or sell shares through this trading account. Transactions can be done through this account by using a unique client code which was provided by the broker to the investor. The shares bought by the investors are keeping in electronic format instead of paper form. Such electronic format of shares is known as demat account. Shares are will keep in the
just as keeping money in the demat account. Shares can buy or sell according to convenience. The new shares will be added to the account. In the same way sold shares will be excluded from the account. An accurate details of the shares belong to the investor will be there in the demat account. Transactions can be done only among the shares listed in the stock exchanges. NSE and BSE are the two important exchanges available at present. Brokers have the responsibility to pay the money for the transactions done from these terminals for the investor. In order to pay the money of stock exchanges investors should give account payee cheque on the name of the broker.
The regulations for the share transaction can be given to the broker directly or over phone. Broker may make transaction according to these regulations. After the transactions broker will give trade confirmation slip. Broker should give contract note to the investor within 24 hours. Contract note contains all the basic details with regards to the transactions including order number, time, price and brokerage. Contract note is the authorized certificate to settle complaints as well as claims. It can be also use as a proof to submit complaint against the broker. Investor can clear doubts by cross check through the site of the exchanges. Investor should make sure the credibility of investor often by making such examines.
As per the rule of SEBI money transactions should be settling within 24 hours after the share transaction. It is otherwise known as T plus two. Amount will be withdrawn from the account within two days after the purchase of shares. Amount attain through selling shares also get in to your account within two weeks. Investors can withdraw that amount with the help of broker according to their convenience. Investors can make transaction directly from anywhere through internet trading. But help of an efficient broker is essential even in the internet trading.
Brokerage attain from share transactions is the main income of broking companies. Maximum 2.5% can be charged as brokerage. As part of the tough competitions broking companies charging comparatively moderate charges at present. Despite brokerage investors should given other charges such as service charge and tax etc.
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