One of the most important changes on how the stock market functions is the introduction of a Demat account Technology has now made way for an organised approach to how the stock market functions and this has also helped build an error free environment where everything that was on paper is now stored in your Demat account.
Earlier, the Bombay Stock Exchange managed through an open trading system where traders would be expected to stand and shout out loud about their stock and share market prices. After this process, the traders were then expected to exchange receipts and the share certificates openly, without a proper system in place. This was a time consuming process since paperwork generally takes a lot of time; therefore, a Demat account has been introduced to get rid of the shortcomings of how we trade.
This process allows you to store all the certifications that are held by an investor so that one is not required to carry all of it in a physical form. This helps eliminate fraud or theft along with the security factor that is one of the most essential elements of trading. These certificates are generally converted or transferred into a number of securities in an electronic form, bringing along with it the convenience factor.
Why Use Demat Accounts?
A common point: Demat accounts are not only meant for shares, but also other debt instruments such as bonds where you can hold all your investments in a single account. This is a common account where you do not really need to carry physical certificates lest they get lost or are stolen. The account will already have all your details and address and will be updated in accordance to your transactions.
Provides you with the ease: One of the fundamental factors that makes paper transactions dangerous is the vulnerability factor. Paper certificates can be damaged or else inconvenient to carry. Thus, Demat accounts come in handy because it is one of the most convenient ways to hold your securities.
Eliminates risk: This is one of the most important creations that eliminates delivery risks and provides a transaction that is free of errors and fraud. Also, it helps avoid extra costs.
