SEBI Rules Govern Demat Account:

An individual investor cannot buy or sell shares without a Demat account. In the earlier days, the shares were issued in the paper form and that process is no longer in existence. In 1996, the Securities and Exchange Board of India, SEBI made it mandatory for all investors to open Demat accounts. The entire transactions of selling and buying on the demat account and the financial transactions are credited or debited accordingly.

Significance of Demat Account:

A Demat account is similar to a bank account. In bank account it deals with the account holders finances. In demat account it takes account of shares, bonds, and securities. Hence, individuals will require to hold a demat account. Individuals will need to maintain demat and trading account to trade (buy/sell) in the stock market. What is trading account? It is an account that enables individuals to buy and sell shares in stock market.

Exception: Trading without Demat A/C

Now the question is can anybody do trading without a demat account. It is made possible for traders who intend to do trading in the futures, options, and currency derivatives. In all the mentioned trading the share market conducts and transactions are complete using cash settlements.

To trade other forms of services such as equities, intraday trading, it is mandatory for the investor to adhere to the regulations laid by the securities and exchange board of India (SEBI) and hence demat account is compulsory.

Features of Demat Account:

1. Demat account ensures safety and security of investor’ shares.
2. Demat account holds financial instruments like equity shares, government securities, and exchange traded funds in an electronic form.
3. It provides a unique number that identifies the individual account.

Condition to Open A Demat Account:

1. The individuals who plan to establish their trading in share market will have to open demat and trading account.
2. Individuals of any age group can enter to operate demat account. They will have to submit Pan card, identity card proof, KYC documents. For beginners, Kotak Securities is the best as it provides the best advises. One must bear in mind that the investor must get full time support.