How to Choose the Best Demat Account for Stock Trading in India
In 2018, the Securities and Exchange Board of India (SEBI) made it mandatory for investors to open a dematerialized account (demat) for exchange transactions. A demat account is a digital deposit account where you can store your investments and perform market-related transactions. Whether you have electronic or physical stock certificates, opening a demat account is necessary to hold shares in investments such as stocks, bonds, mutual funds, exchange-traded funds, securities and other financial instruments. Overall, National Securities Deposit Ltd. (NSDL) and Central Depository Services Ltd. (CSDL) manage the demat accounts. But securities brokerage firms or banks serve as an intermediary or depository participant (DP) between investors and central/national depositories to facilitate the trading process. Where you choose to open demat accounts plays a crucial role in determining the profits from your trades. There are four factors you should look for when selecting a broker to open a demat and trading account.
Ease of opening
The next factor in choosing a demat account is seeing how much you will have to pay for various account fees. While most banks open demat accounts for free, they charge a fee to offer services such as brokerage, account maintenance, and various services. Brokerage fees apply each time you sell a stock. The account maintenance fee is used to maintain a trading account for the year. Other costs include dematerialization – where physical stock certificates are converted into digital certificates. Or re-materialization where you want digital certificates converted to hard copies. Before opening a demat and a trading account, compare the fees charged by different brokers for these services.