In this article you will learn about these similar quires:
- Demat Account Vs Trading Account
- Why Demat Account required?
- Why Trading Account required?
- Who can open Demat Account?
- Who can open Trading Account?
Depository Beneficiary Account is popularly known as Demat Account. Demat Account is like an electronic locker to keep securities in electronic (dematerialised) form.
Securities like Bonds, Debentures, Equity Shares, Preference Shares or any securities having ISIN can be held in Demat Account. Securities having ISIN can be held in Demat Account even when they are not listed on any Stock Exchange. Client opting for equity segment (cash market) in Trading Account are mandatorily need to have Demat Account. Demat Account is to be open with Depository Participant (DP) of either CDSL or NSDL. ProStocks is Depository Participant of CDSL. Your Stock Broker can also be your DP. All Stock Broker are not DP.
Trading Account is used for buying and selling listed shares and securities at recongnised Stock Exchanges and different from Demat Account. Trading Account can be opened only by Stock Broker. Your Trading Account will be used for both trading as well as investment. Shares purchased through Trading Account are held in Demat Account and shares sold through trading account are transferred from Demat Account to Stock Exchange through Stock Broker.
| Sr.No |
Difference |
Demat Account |
Trading Account |
| 1 |
Account opening |
By Depository Participant popularly known as DP |
By Stock Broker / Broker Member of recongnised Stock Exchange |
| 2 |
Purpose |
To hold listed and unlisted securities electronically |
To buy and sell shares and securities at recognized Stock Exchanges |
| 3 |
Regulator |
SEBI |
SEBI |
| 4 |
Quasi Regulator |
Depository |
Stock Exchange |
| 5 |
Mode of operation |
By Client electronically ( through internet login) as well as physical instructions , Stock Broker through limited purpose POA given by Client |
Online ( Operate through online internet login ), Offline ( through telephone call and trade, Email , personal visit etc.). Stock Broker cannot take POA. |
| 6 |
Multiple |
Multiple Demat Account with one DP with purpose |
Only one Trading Account can be opened with one Stock Broker |
| 7 |
Single or Joint |
Single or jointly with other individual |
Single only. Joint Trading Account becomes partnership firm , hence not possible as individual |
| 8 |
Constitution / category |
Partnership firm cannot open in their name but can open in the name of the partner/s for the benefit of partnership firm |
Partnership firm can open Trading Account |
S P Toshniwal
Founder and CEO
www.prostocks.com
