Article

Procedure: Open a Demat Account
February 06 , 2013

1) DP or Demat or Dematerialised Account means that your shares are not held as physical certificates. Just like your bank account balance is not held as physical cash in the locker but simply as entries in the passbook, your shares are held as entries against your DP account

2) You need this account to invest in IPOs or trade in shares

3) If you have any old physical shares, you might as well convert them into demat form as soon as possible

4) You also need the Demat account to invest in certain bonds (such as infrastructure bonds)

1) In case you only want to invest in bonds or funds and not in shares, you may not need a trading account at all. A Demat account would suffice

2) Most providers offer both demat and trading accounts, but you can choose to take them from different providers if you want

3) The fees for Demat accounts may include an opening charge, and an annual charge (of a few hundred Rupees). Trading charges on the trading account are on a per trade basis (typically 0.25% - 0.75%). You can compare both these to arrive at the best package

1) Once you call the sales person over, he will hand you a rather large form and a set of documentation requirements

2) In some forms, Derivatives (Futures and Options) are combined with share trading. Make sure you sign here only if you want to trade Derivatives

3) You need to give the account opening cheque and possibly another cheque that goes to your trading account. This money is available for your first trade, and is call margin

4) Once the forms signed and documents given, the account gets opened in a week to 10 days. Thereafter, you can begin trading

1) Demat accounts generally have an annual maintenance charge, irrespective of how active you are in trading. This is usually a few hundred Rupees a year

2) Most providers send Demat statements once a quarter. This is separate from the trade confirmation you get when you buy or sell shares.

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