You must be thinking what is there to choose between Demat Accounts? After all, it’s just an account where you can hold your shares electronically. Most of the brokers provide you access to your Demat and trading account through a single platform. Holding shares in an electronic form requires a Demat Account & opening a Demat account is the first step towards investing in stock markets. A Demat Account can be used to hold shares and other financial securities such as mutual funds, bonds, Exchange-Traded Funds (ETFs), debentures, etc.
A Demat Account is just like a bank account. The only difference between the two is Bank account keeps your money in electronic form and the Demat Account keeps your shares and other financial securities in electronic form. Both of these accounts are safe to use and provide the utmost security of your money and investments.
So, there are 5 factors one must keep in mind in order to choose the best Demat Account for trading: –
1) Comparison of trading costs and brokerage:- There are various costs and charges associated with a Demat Account. However, there are brokers in the market who are waiting to provide you a Demat Account with very low broking costs. You need to determine which broker is providing you an account with the lowest brokerage & maintenance charges and get a Demat Account opened with that broker. All the brokers charge an Annual Maintenance Charge (AMC) and this charge is based on the number of securities you have in your Demat Account and ranges between Rs.300 to Rs.900 per year. Each time you make a transaction, your Depository Participant (DP) or Broker pays a charge to either National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL) with whom your DP or broker is registered.
2) Software and User-Interface:- One of the most important factors you must consider while choosing best Demat Account. Every broker or DP has its own software which you can download (Application) or access (Website). The website or application should load quickly, provided that your internet connection is also fast. Make sure that the app or website should not take much time in opening as many websites do take time in opening in spite of a good internet connection as the prices of the shares in stock market are really dynamic and they change within seconds. So, if the website or app takes time in opening, so don’t get your account opened with that broker or DP because due to a second delay in opening the site or app, it may lead you to losses.
3) Square off and Intraday trading timing:- If you are a beginner, you are required to make sure that your broker or DP knows when to square off the positions. This happens a few hours before the closure of the stock market and also ensure that your broker has enough knowledge when to start intraday trading. Keep yourself updated about your DPs or brokers actions so that there will be no chance of any fraud or theft.
4) Facilitating Necessary Information:- Nowadays, DPs or Brokers are required to provide updates to be displayed on their official trading site so that investors can make use of that information. It is also mandatory for DPs or Brokers to provide In-Depth analysis which shows the current market trends. For e.g.– real-time data, direct call-to-call buttons, concentrating on your main competitors, etc. are all a main part of trading for an investor. These are the few points which add value to the image of a DP or a Broker in the market and these points should be considered before choosing the best Demat Account.
5) DPs or Broker’s image in market:- Finally, most important factor to be considered before choosing a Demat Account for trading. DPs or Broker’s image in the market is the main thing you should check before enrolling for a Demat Account with it. For e.g.- check for any pending complaint of DP or broker with Securities and Exchange Board of India (SEBI), no regulatory investigations or inquiries should be pending against the DP or Broker; check social media and discussion forums for any negative feedback regarding DP/Broker customer services, etc. So, a DP/Broker who takes care of all these factors regularly is the one you should contact and get your Demat Account opened.
Conclusion: –
In India, the best Demat Account will be known for its service quality, least customer complaints and security of transactions. The whole motive of the research is that you don’t end up approaching the wrong or a manipulative DP/Broker. However, there are other factors also that one should consider before selecting the best Demat Account but the 5 factors discussed above are the major topics you should check out before contacting a DP/Broker.
About The Author
SMC Global
Established in 1994, SMC Global Securities limited is one of India’s trusted and award winning financial services companies. It is present across 450+ cities in India through a strong network of 2680 sub-brokers and 94 branches. It also has an experienced and well qualified team of around 4000 employees to serve the financial and investment needs of about 2.0 million customers. SMC is a well-diversified financial services company in India offering services across brokerage (across the asset classes of equities, commodities and currency), investment banking, wealth management, depository services, insurance broking, clearing services, mortgage advisory and real estate advisory services to corporate, institutional, high net worth individuals and other retail clients.
