It is true that a demat account is necessary if you want to start investing in the stock market. But have you ever wondered, why demat account is required?
SEBI has made it mandatory for every investor to invest in the shares only in a dematerialized form. The trading or investing of physical shares is not allowed anymore because of the lack of safety and regulation.
Therefore, it is now important to have a demat account if you want to be an investor in the stock market. There are various reasons for SEBI making it a mandatory practice. Some of the reasons are.
- Security – With the introduction of a demat account, it has become easier for investors to digitally store their shares. The physical shares had a risker risk of getting misplaced or destroyed, but with the demat account, it now stays safe.
- Ease of access- You can check the number of shares, the status of your demat account, your profit and loss, in just a single click. With the introduction of demat account, now you don’t have to rely on your stockbroker for everything and an investor can easily invest in the share market from anywhere and at any time.
- Easy Buy/Sell- You can now buy and sell at your own convenience and with just a single click. It is because when you open a demat account, the stockbroker also gives you access to a trading app, that makes your trading easier.
But do you require it for all the segments? Is demat account necessary for trading? The answer is No. If you are an intraday trader, you don’t necessarily need a demat account because there is no holding of shares. When the shares are not coming in a demat account, then just having a trading account will also work.
So, in all, a demat account is required to maintain the security and allow the regulatory bodies to keep a proper check on it.
Hope this helps. If you have any other stock market-related queries, you can fill in your details and concerns in the form and we will try to resolve them as soon as possible.
