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INDEX
1) Introduction of demat account
2) Objectives, advantages and disadvantages of demat account
3) Information about Sharekhan and procedure for opening demat
account
4) Process of dematerialising shares, Transfer of shares
5) Trading & Settlement Procedure
6) account opening charges and custodian charges and Brokerage rate of
different broker
7) History of E Trading and detail of online trading
8) Allotment of shares through demat account
9) Procedure to close demat account
10) Conclusion
1 INTRODUCTION OF DEMAT ACCOUNNT
Demat refers to dematerialisation of shares .Any
investor who wish to purchase shares must open
documents with registered broker.
It is, however desirable that you hold securities in
demat form as physical securities carry the risk of
being fake, forged or stolen.
Just as you have to open an account with a bank if
you want to save your money, make cheque
payments etc, Nowadays, you need to open a demat
account if you want to buy or sell stocks.
You approach a DP and fill up the Demat account-opening
booklet. You will then receive an account number and a DP ID
number for the account. Quote both the numbers in all future
correspondence with your DPs.
You have to approach the DPs (remember, they are like bank
branches), to open your demat account.
Let's say your portfolio of shares looks like this: 150 of Infosys,
50 of Wipro, 200 of HLL and 100 of ACC. All these will show
in your demat account.
So you don't have to possess any physical
certificates showing that you own these shares.
They are all held electronically in your account. As
you buy and sell the shares, they are adjusted in
your account.
Just like a bank passbook or statement, the DP
will provide you with periodic statements of
holdings and transactions. It is a type of banking
account which dematerializes paper-based
physical stock shares.
The depository system helps in reducing the cost of newissues
due to less printing and distribution cost..In demat account there
is no possibility of fake certificate and manipulation in
preparing share certificate , no chances of shares being
misplaced as it is routed through electronic mode and it is one
of the convenient way of settling transaction and operating
demat account
The dematerialized account is used to avoid holding physical
shares and the shares are bought and sold through a stock
broker. This account is popular in India. The Securities and
Exchange Board of India SEBI mandates a demat account for
share
Demat account allows you to buy, sell and transact shares
without the endless paperwork and delays. It is also safe, secure
and convenient.
Demat account is a must as all trade are now being settled in a electronic mode. Nowadays, practically all trades have to be settled in dematerialised form.
Banks are also advantageous because of the number of branches
they have. Some banks give the option of opening a Demat
account in any branch, while others restrict themselves to a
selected set of branches.
Some private banks also provide online access to the Demat
account. So, you can check on your holdings, transactions and status
of requests through the net banking facility. A broker who acts as a
DP may not be able to provide these services.
2 Object Of Demat Account
India has adopted this system in which book entry is
done electronically.
It is the system where no paper is involved. Physical form is
extinguished and shares or securities are held in electronic mode.
Before the introduction of the depository system by the
Depository Act, 1996, the process of sale, purchase and transfer of shares
was a huge problem and the safety perspective was zero.
Benefits of demat account
The following are benefits of demat account
Its a safe and convenient way to hold securities
Immediate transfer of securities is possible
It provides more acceptability and liquidity of securities.
It ensures faster communication to investors. It helps avoid bad
delivery problem due to signature differences, etc.
It ensures faster payment on sale of shares. No stamp duty is paid on
transfer of shares.
There is no stamp duty on transfer of securities
Elimination of risks associated with physical certificates such as bad
delivery, fake securities, delays, thefts etc
There is a major reduction in paperwork involved in transfer of
securities,reduction in transaction cost etc
The depository system reduces risks involved in holding physical
certificated, e.g., loss, theft, mutilation, forgery, etc.
No odd lot problem, even one share can be sold thus there is a
advantage
Change in address recorded with DP gets registered with companies
in which investor holds securities electronically eliminating the need
to correspond with each of them separately;
Transmission of securities is done by DP eliminating correspondence
with companies;
Automatic credit into demat ac bonus/split/consolidation/merger etc.
Holding investments in equity and debt instruments in a single
account.
It ensures transfer settlements and reduces delay in registration of
shares.
Immediate credits in case of any allotment in bonus, rights issues and
IPO s.
It increases the efficiency of the registrars and transfer agents and the
Secretarial Department of the company.
it reduces time taken during trading and avoiding the problem like
signature mismatch and loss of certificates and the risk due to fire and
theft
It eliminates chances of forgery – bad delivery.
The depository system reduces risk of delayed settlement.
Shares are credit automatically in Demat account ,no paper work is
required
Demat account holders need not pay stamp duty posted.
It increases confidence in investors.
Shares are credit automatically in Demat account ,no paper work is
required
You can open a multiple demat account, which can be operated by
multiple holders
It is quick, easy, safe and secure
You can even sold one share as per your choice
It increases overall of trading and profitability.
You can save a transaction cost with quick transfer
It ensures greater profit due to increase in volume of trading.
Nomination facility is available in Demat account
You can purchase ,hold and sell shares in electronic form .
You can open as many account ,there is no limit on that, and you can
open your account before you buy your first security
Converting physical holding into electronic holding
(dematerialising securities) In order to dematerialise physical
securities one has to fill in a DRF (Demat Request Form) which is
available with the DP and submit the same along with physical
certificates one wishes to dematerialise. Separate DRF has to be filled
for each ISIN Number.
Disadvantages of Demat Account
Trading in securities may become uncontrolled in case of
dematerialized securities.
It is incumbent upon the capital market regulator to keep a close
watch on the trading in dematerialized securities and see to it that
trading does not act as a detriment to investors.
The role of key market players in case of dematerialized securities,
such as stock-brokers, needs to be supervised as they have the
capability of manipulating the market.
Multiple regulatory frameworks have to be confirmed to, including
the Depositories Act, Regulations and the various By-Laws of various
depositories.
Additionally, agreements are entered at various levels in the process
of dematerialization.
These may cause anxiety to the investor desirous of simplicity in
terms of transactions in dematerialized securities.
However, the advantages of demat account are more as
compare to physical trading acount
3 Information about sharekhan
Sharekhan is a leading online stock broker in India. Sharekhan
is actually a brand name from 'SSKI Securities'.
A Demat Account is an account which you need in India in
order to buy and sell shares.
Earlier shares or stocks or a company were bought and sold in
paper format. Now they are stored electronically. Just like money is saved in
your bank account, Shares are stored in your Demat Account
You can open a Demat Account with sharekhan. This is
especially recommended if you have an online trading account with
Sharekhan.
You can then link you Sharekhan trading account with your
Sharekhan Demat Account so that any shares bought with the trading
account can be directly transferred to your Demat.
In India if you are planning to trade in shares, buy sell stocks,
trade in stock market derivatives like futures and options, or invest in
commodities like gold etc. you should know about Sharekhan.
You can also open a Sharekhan demat account which investor
need in India to buy and sell shares.
Documents Needed to Open a Sharekhan Demat Account.
The following are the documents to be submitted to open Sharekhan
Demat account
1. PAN Card. Pan card is now mandatory in order to open a Demat
Account. Without one cannot open demat account .without PAN card
on e can become nominee
2. Address Proof. ration card, driver's licence, electricity bill, voters id
or election card, etc. can be submitted for opening demat account
3. Your recent photographs. Two or three.
4. A cancelled check. This may or may not be required. But carry your
bank passbook and check book when you go to open a Sharekhan
Demat Account
Who can be nomineee?
Nomination facility is available in Demat Account. The account
holder(s) has to provide nomination details or given a declaration.
Individuals, having/opening demat accounts, either, singly or jointly with
one or two joint holders can appoint nominee.
A nominee shall not be a Society, Trust, Body Corporate, Partnership
Firm, Kartha of HUF or a Power of Attorney holder.
If the account is held jointly, all the joint holders are required to sign
the nomination form.
Nomination once given can be changed / deleted as and when
required. Only one individual can be appointed as a nominee for a demat
account.
A minor can be nominated. In such case the beneficial owner should
provide the name and address of the Guardian of the minor nominee.
Sharekhan Demat Account Charges
1. Sharekhan Demat Account Opening Charges: NIL
2. Sharekhan Demat Account Maintenance Charges: Rs. 75 per
quarter, i.e. Rs. 300 per anum.
3. Sharekhan Demat Account Closing Charges: Rs. 100.
4. Sharekhan Demat Account Charges for Buying Shares: 0.02% ,
Minimum Rs. 15.
5. Sharekhan Demat Account Charges for Selling Shares: 0.04%,
Minimum Rs. 15.
6. Sharekhan Dematerialization Charges: Rs. 3 per certificate or Rs
15 per request, whichever is higher.
7. Sharekhan Rematerialization Charges: Rs. 25 per certificate of
0.12% of the value of the securities, whichever is higher.
8. Sharekhan Demat Account Custody Fee: NIL
9. Charges for Requests to freeze or defreeze Sharekhan Demat
Account: Rs. 25 per request.
Sharekhan offers two types of online trading Accounts suited to
different investor needs.
Sharekhan Classic Trade - Website Based trading, suitable for long
term investors who do not worry about stock price fluctuations
minute-by-minute. Sharekhan Classic Trade is not suitable for
Intraday traders.
Sharekhan Tiger Trade - Terminal based trading, especially suited for
intraday traders
The brokerage charged by Sharekhan is negotiable and if you
are going to trade heavily do negotiate with Sharekhan for a good brokerage
deal.
Sharekhan Brokerage Charges are not too-high nor too-low and
comparable with other online brokers like SBICAP Securities, Motilal Oswal,
etc.
Below is a typical range of brokerage charged by Sharekhan.
1. Sharekhan Brokerage for Delivery Trades: 0.30% to 0.50 %
2. Sharekhan Brokerage for Intraday Trades: 0.03% to 0.05%
Apart from the above brokerage, remember there will always be
an additional charge of STT (Securities Transaction Tax) of 0.02% and
Service tax of 12% on the brokerage charged (not on the buy or sell
amount).
Sharekhan Trading Account is excellent if you want to start
your investing adventure.
There may be a few negative reviews about Sharekhan like any
other online broker, but since this one of the most renowned and biggest
brokerage house in India, there are no instances of fraud or cheating
4 Process for dematerialisation of shares and transfer of
shares
The complete process of dematerialisation is outlined below
•Surrender certificates for dematerialisation to your depositor
participant.
•Depository participant intimates Depository of the request
through the system.
•Depository participant submits the certificates to the registrar
of the Issuer Company.
•Registrar confirms the dematerialisation request from
depository.
•After dematerialising the certificates, Registrar updates
accounts and informs depository of the completion of dematerialisation.
•Depository updates its accounts and informs the depository
participant.
•Depository participant updates the demat account of the
investor.
A comparison of the fees charged by different DPs is detailed below.
But there are three distinct advantages of having a demat account
with a bank — quick processing, accessibility and online transaction.
Generally, banks credit your demat account with shares in case of
purchase, or credit your savings accounts with the proceeds of a sale on the
third day.
Banks are also advantageous because of the number of branches they
have.
Some banks give the option of opening a demat account in any
branch, while others restrict themselves to a select set of branches.
Some private banks also provide online access to the demat account.
So, you can check on your holdings, transactions and status of
requests through the net banking facility. A broker who acts as a DP may not
be able to provide these services.
4.2 TRANSFER OF SHARES
To transfer shares, one need to fill the Depository Instruction Slip
Book (DIS).
Firstly we need to check, whether both Demat account's Depository
Participant is same or not(CDSL or NSDL) If both of them are different,
then we need an INTER Depository Slip (Inter DIS).
If they are same, then we need INTRA Depository Slip (Intra DIS).
For example: If we have one Demat account with CDSL and other Demat
account with NSDL, then we need an Inter DIS.
Generally, brokers issue Intra DIS. Once we identify the correct DIS,
fill the relevant information like scrip name, INE number, quantity in words
and figures and submit that DIS for the transfer to the broker with
signatures.
The transferor broker shall accept that DIS in duplicate and
acknowledge receipt of DIS on duplicate copy.
Do try to submit that DIS when market is on. Accordingly, date
of submission of DIS and date of execution of DIS can be same or a
difference of one day is also acceptable
DIS is almost like a cheque book. Accordingly, it can be
misused if issued blank. So deposit only a completely filled in Slip to
broker. Do cut out unfilled rows so that none can fill them later on.
5 Trading & Settlement Procedure
BSE, the oldest Stock Exchange of Asia,, had an open
outcry trading system till March 1995 where member-brokers used to
assemble in a trading ring for doing transactions in securities.
It had switched over to a fully automated computerized mode of
trading known as BOLT (BSE on Line Trading) System w.e.f. March 14,
1995.
Through the BOLT system, the member-brokers now enter
orders for purchase or sell of securities from Trader Work Stations (TWSs)
installed in their offices instead of assembling in the trading ring.
This system, which was initially both order and quote driven, is
currently only order driven. The facility of placing of quotes has been
discontinued W.E.F, August 13, 2001 in view of lack of market interest and
to improve system-matching efficiency.
The system, which is now only order driven, facilitates more
efficient in-putting, processing, automatic matching and faster execution of
orders in a transparent manner.
Compulsory Rolling Settlement (CRS) Segment
In order to bring about settlement efficiency and reduce
settlement risk, the Group of 30 (commonly known as G-30) had
recommended in 1989 that all secondary market across the globe should
adopt a rolling Settlement cycle on T+3 basis by 1992, i.e., the trades should
be settled by delivery of securities and payment of monies on third business
days after the trade day.
With a view to implement the above recommendations,
introduce the best international practices and to achieve higher settlement
efficiency, trades in all the equity shares listed on the Exchange in CRS
Segment, as mandated by SEBI, were required to be settled initially on T+5
basis W.E.F December 31, 2001.
As per the directive by SEBI, all transactions in all groups of
securities in the Equity Segment and Fixed Income securities listed on the
Exchange were required to be settled on T+3 basis W.E.F. April 1, 2002.
Further, as per the mandate received from SEBI, the Exchange has since
introduced the settlements for all groups of securities in the Equity Segment,
"F" & "G" groups on T+2 basis W.E.F. from April 1, 2003.
Under a rolling settlement environment, the trades done on a
particular day are settled after a given number of business days rather than
settling all trades done during an 'account period' of a week or fortnight.
A T+3 settlement cycle means that the final settlement of transactions
done on T, i.e., trade day by exchange of monies and securities between the
buyers and sellers respectively occurs on third business day after the trade
day.
The transactions in securities of companies which have made
arrangements for dematerialization of their securities are settled only in
demat mode on T+2 on net basis, i.e., buy and sell positions of a member-
broker in the same scrip are netted and the net quantity and value is required
to be settled. However, transactions in securities of companies, which are in
"Z" group or have been placed under "trade to trade" by the Exchange as a
surveillance measure, are settled only on a gross basis and the facility of
netting of buy and sell transactions in such scrips is not available.
For example, if a member-broker buys and sells 100 shares of a
company on the same day which is in "Z" group or on "trade to trade" basis,
the two positions are not netted and the member-broker has to first deliver
100 shares at the time of pay-in of securities and then receive 100 shares at
the time of pay-out of securities on the same day. Thus, if one fails to deliver
the securities sold at the time of pay-in, it is treated as a shortage and the
relevant quantity is auctioned/ closed-out by the Exchange.
6 DEMAT ACCOUNT OPENING COST AND OTHER
CHARGES
The cost of opening and holding a Demat account. There are
four major charges usually levied on a Demat account: Account opening
fee, annual maintenance fee, custodian fee and transaction fee. All the
charges vary from DP to DP.
Depending on the DP, there may or may not be an opening
account fee. Private banks, such as ICICI Bank, HDFC bank and UTI bank,
do not have it. However, players such as Karvy Consultants and the State
Bank of India charge it.
But most players levy this when you re-open a Demat account,
though the Stock Holding Corporation offers a lifetime account opening fee,
which allows you to hold on to your Demat account over a long period. This
fee is refundable.
Annual maintenance fee: This is also known as folio
maintenance charges, and is generally levied in advance.
Custodian fee: This fee is charged monthly and depends on the
number of securities (international securities identification numbers – ISIN)
held in the account. It generally ranges between Rs. 0.5 to Rs. 1 per ISIN per
month.
DPs will not charge custody fee for ISIN on which the
companies have paid one-time custody charges to the depository.
Transaction fee: The transaction fee is charged for
crediting/debiting securities to and from the account on a monthly basis.
While some DPs, such as SBI, charge a flat fee per transaction, HDFC Bank
and ICICI Bank peg the fee to he transaction value, subject to a minimum
amount.
The fee also differs based on the kind of transaction (buying or
selling). Some DPs charge only for debiting the securities while others
charge for both. The DPs also charge if your instruction to buy/sell fails or is
rejected.
In addition, service tax is also charged by the DPs.
Things you should look for while going in for a demat account:
1. Annual Fee: Nearly all the demat account provider charge some
fixed yearly fees.
2. Commission: Commission on buy as well as sell. Each transaction
either buy or sell attract commission from your broker. This is generally
some %age of the transaction value.
3. Online trading account: Check if the company provides an online
trading facility. Most sites work well with Internet Explorer that is
shipped with any version of Microsoft Windows. Most of them
doesn’t work with other browsers like Mozilla Firefox, Apple’s
Safari.
4. Research content: Almost all the big player give daily
recommendations of buy or sell to its members.
Demat Account Opening fees
Few banks will not charge you the demat account opening fees,
but there is some annual maintenance charges as well as transaction charges
on Demat account
Custodian chareges -Custodian fees depends on the number of securities
and this fees is charged monthly (international securities identification
numbers — ISIN) held in the account. It generally ranges between Rs 0.5
DPs will not charge custody fee for ISIN on which the companies have paid
one-time custody charges to the depository.
Transaction
On a monthly basis transaction fees is charges for crediting/debiting
securities from the account. The fee also based on the kind of transaction
(buying or selling). Some DPs charge only for debiting the securities while
others charge for both. The DPs also charge if your instruction to buy/sell
fails or is rejected. In addition, service tax is also charged by the Dps.
7 Brokerage rate of different broker
Here are some top demat/trading account providers including India
Infoline.
The info is given in the following order
Name Account
opening
Charge
Annual
maintenance
Charge
Brokerage
for Delivery
Brokerage for
Intra Day
Reliance
Money
750 200 0.01% 0.01%
Geojit BNP
Paribas
650 300 0.30% 0.03%
Religare 500 250 0.30% 0.06%
Canmoney 200 200 0.35% Buy=free Sell
= 0.05%
Angel
Broking
775 300 0.50% 0.10%
India Infoline 555 280 0.50% 0.10%
Kotak
Securities
750 400 Buy = free
Sell = 0.4%
0.06%
Sharekhan 750 300 0.5% 0.1%
HDFC
Securities
799 560 0.5% 0.1%
ICICI Direct 975 500 0.75% 0.05%
Broker: KotakSecurities
Probably one of the oldest player in the field. Their main
strength lies in the research content that they provide to their users.
Account opening charges are about Rs. 750 you also get a zero
balance kotak mahindra bank account with it.
Brokerage for a low volume trader at 0.59 % is quite high as
compared to most of its peers.
There is also a deliver charge of Rs 23 for every delivery based
selling.
Brokerage for intraday transaction is 0.06%.
The trading interface is quite powerful but is geekish. You need
to know a lot of terms of trading to effectively do online trading.
Account opening charges are Rs 2250. Commission is 0.75% for both buying and selling with a minimum of Rs 100 Rs 500 is account opening charges. Brokerages are about 0.3% for delivery based trade and 0.03% for margin trading.
Any individual or corporate can open a demat account. It is
possible to open more than one demat account in identical names.
A demat account can be opened in more than one names but
can be operated only for dematerialization of shares held in the same
combination.
No shares can be credited by purchase or transferred from any
other account.
7 HISTORY OF E TRADING
1918
Dec 31, 2006 - SEBI today extended the deadline for
mandatory requirement of Permanent Account Number (PAN) for demat
account holders to December 31, 2006.
2007
Jan 2007 - In January 2007, it became mandatory for any
person holding a demat account to possess a permanent account number
(PAN).
2009
Nov 30, 2009 - The MFSS platform which was launched on
November 30, 2009 is a gateway where investors can buy and sell mutual
fund schemes online, and the payments for which will be directly debited
from their bank accounts. The units purchased or sold will be credited In the
demat account
2010
Mar 26, 2010 - The stock fell below the follow-on public offer
(FPO) price of Rs 300. NMDC has credited shares issued in the recently
concluded FPO to demat account of the successful allottees on Friday, 26
March 2010.
The history of e-trading began in 1983, when a doctor in
Michigan placed the first online trade using E*TRADE technology. What
began with a single click over 16 years ago has now taken the world by
storm.
The concept was visualized by one Bill Porter, a physicist and
inventor with more than a dozen patents to his credit, who provided online
quotes and trading services to Fidelity, Charles Schwab, and Quick & Reilly.
This led Bill to wonder why, as an individual investor, he had to pay
a broker hundreds of dollars for stock transactions.
With incredible foresight, he saw the solution at hand: Someday,
everyone would own computers and invest through them with unprecedented
efficiency and control.
And today his dream has become a reality. e trading has become a
way of investing in the developed world and is soon catching on in
developing countries too.
Imagine a scenario where you log on to your account, get the live
quotes of scrips you are interested in, get advise from experts and research
reports on your investment choice and then just click the mouse to place
your order, pay the amount due (which automatically gets debited into your
account with the on line brokerage firm), get your account statement, and the
delivery of your shares into your DeMat account.
All this through just the click of a mouse. Seems like a dream? But
with online trading this has become a reality.
Sitting in ones own home or office or even from your car , as long as
you can access the net, you can trade on the market.
There are three basic things needed for e-trading, a bank account, a D-
Mat account and a brokerage account.
The steps in e-trading replicate the real life situation and are fairly
simple to follow.
Once these three accounts are opened, the money and shares are
transferred to your bank and demat account automatically, electronically and
without any paper work.
The first step is of course to open an account. One can open multiple
accounts with himself or herself as the first name in the account.
Then it is necessary to determine the type of account that you want
and how you want to pay for the trades you make.
Joint accounts are allowed but for that you will need to have certain
information about those people. Accounts can be Individual, Joint, Sole
Proprietorship, Corporate, or Partnership etc.
The form filling requires simple personal details like Full legal name,
Citizenship status, Residency status, employer's name and address, your
passport\PAN number, Date of birth etc.
One can download the forms or request for them by post or even
request for a representative of the firm to come over to help you with the
form.
Post-submitting, you are allotted a USER ID and PASSWORD while
giving details for registration. Then an Account Reference Number is
generated and displayed to you.
These three things are unique to an individual and ensure security of
transactions. The acceptance of the application is communicated by email.
Once you have got your USER ID and PASSWORD and your account
has been set up, you can access the website and login using the same.
The second step is then to Fund Your Account. In order to start
trading online it is important that you deposit money in your bank account
before placing a buy order.
In order to place a sell order you must have shares in your DEMAT
Account. You can sell your shares anytime as long as shares are there in
your DEMAT Account. In order to place a buy order you need to fund your
account. You can do this by depositing money in your bank account or else
you can sell some shares existing in your demat account and use the
proceeds of sale to fund your purchase transaction.
The amount of money required before placing a buy order would
depend on the value of order and the type of e-invest account you have
enrolled for - whether cash or margin.
In a Margin account one can use a line of credit to buy marginable
securities or for overdraft protection.
Such an account is opened after taking into consideration Annual
income, Net worth, description of your investment objectives, as it involves
lending a line of credit. In a cash account, the amount of securities bought
has to be backed by the cash in the account.
Then comes placing the order. For this you enter your Trading
password and go to trade.
From the Trading tab, select Enter Order under the Stocks heading.
Select a transaction type: Buy, Sell. At 'Number of Shares', type the number
of shares that you want to buy. At 'Stock Symbol or Name(s)', type the stock
symbol.
If you don't know the symbol click 'Find Symbol', type the company
name, click 'Search' and click the symbol that you want from the list. For a
market order, select 'Market'. Otherwise, select 'Limit', 'Stop' or 'Stop Limit'
and enter the price. 'Market Order': you just ask the broker to buy or sell
your stocks at the best price available.
'Limit Order': you tell the broker to trade only when the stock hits a
certain price or better. 'Stop Order': you tell the broker to sell your shares if
the stock drops below a certain price. Select either 'Good for Day' or 'Good
Until Canceled'. If you want to place an 'All-or-None' order, click 'All or
None'.
Type your trading password and click 'Preview Order'. If you want to
change your order, click 'Cancel' and make your changes.
To see if your order has been executed and filled as you expect, check your
account balance.
The 'Account Balances' page shows your account equity (the value of
your account) and your buying power. To check your account balance, click
the 'Accounts Services' tab, make sure the correct account number displays
at 'Select Account' and click 'Go'. At 'Total Account Value', see your account
balance.
If an order to buy or sell stock hasn't been executed yet, you might be
able to change or cancel the order.
Orders that you have placed but for which you haven't yet received
execution reports appear when you click 'View Open Orders' under the
'Stocks' heading of the 'Trading' tab.
To change a stock order from the 'Trading' tab, select 'View Open
Orders', make sure you're currently in the correct account, the click 'Change'
beside the order you want to change.
Enter your change or changes - you can change the quantity, price,
and term. For a new price, select the appropriate option button and then enter
the price (unless you're changing it to a market order).
You cannot change the stock symbol or the transaction type (Buy,
Sell, Sell Short, or Buy to Cover). Enter your trading password and click
'Preview Change Order'. Or, if you want to cancel your changes, click 'Do
Not Change'.
In order to cancel a stock order, from the 'Trading' tab, select 'View
Open Orders' under the 'Stocks' heading. Make sure you're currently in the
correct account. Click 'Cancel' beside the order you want to cancel. Review
the information presented to make sure this is the order you want to cancel.
Click 'Cancel Order'. Enter the symbol or the name of the scrip, press "GO"
or the relevant button.
The account opening charge, commission rates and the minimum limit
of transaction vary from site to site. Other charges can include Annual
Services Charges, Custody charges, D-Mat account charges etc.
Also most online traders offer a host of other tools to aid the
investment decision. A full research back up in terms of reports, articles,
opinions, etc., live time quotes, latest news on the scrip, technical charts to
see how the stock's price has changed over time.
So sitting at home one can take an investment decision at ease after
having researched and read up fully about the stock. With the advent of
online trading, it would seem that the markets are just a click away.
Please however, do remember that currently in India the handful of
online trading offers are mere order routing systems. But it will not be long
enough before the entire system goes online. That then will be change for
the better.
7.2HOW TO AVAIL ONLINE DEMAT ACCOUNT
Online demat account is one of the most convenient way of trading in
shares.
In this one can buy shares from any place and from anywhere in the
country.
In this there is no need to call broker or to approach broker for buying
or selling shares. In this investor can buy shares or sell shares without the
help of broker.
In this there is just need to avail password from broker and login ID
from stock broker once both these are provided by the broker then one can
buy or sell shares of the company through computer or through laptop even
when investor is out of station just investor need to do put buy or sell order
in the computer .
Investor need to select at what price he has to buy or what rate he has
to sell shares of the company. It is one of the convenient and attractive way
of doing transaction in securities market. For buying investor need to select
bid rate and for selling investor need to select offer rate.
Through online demat acount investor can check high and low price
of the shares and investor can check chart or graph of the company.
Online has now becoming popular as most investors prefer electronic
mode of transactions as it is convenient way of dealing in shares.
8 Allotment of shares through demat account
Allotment of shares is done through electronic mode as even
dividend and even bonus shares is credited in the demat account.
If bonus shares are alloted it will get credit in the demat account
and it will reflect in the system once shares are alloted and if dividend is
declared it gets credit in the demat account or it reflects in the bank account
where details are provided to NSDL and even dividend amount is delievered
to the investor by postal delivery.
NSDL stands for national securities and ddepository limited
and CDSL stands for Central securities depository limited. All transactions
in BSE and NSE are routed through CDSL and NSDL. It is one of the
largest depository in India.
Thus demat account is most conventient way of trading in
shares as it is routed through electronic mode .
For example if company has announce bonus shares in the ratio
of 1 to 1 then bonus shares and existing hoding will be equal and this shares
gets credited in the demat account and if dividend is declared if one has
opted for E.C.S then it will directly get credited in the demat account or it
also get credited in the demat account.
Thus demat account is considered to be easiest way of
operating demat account as it is risk free from fraud , manipulation and there
is no possibility of making fake certificate as there is
no physical share certificate and shares are credited in the demat account
For Example investor applies for investing in I.P.O then once
shares are alloted it will get credit in demat account and physical certificate
will be there as investment is routed through electronic transaction.
An applicant has the option to seek allotment of equity shares in
electronic or physical mode. An applicant wishing to apply opened to
facilitate trading and settlement of demat shares in the stock exchanges
connected to NSDL.
As on October 31, 2000 1,932 companies signed agreements with
NSDL.
The demat account is necessary to buy shares. The shares will
not given physically. It will be credited in your demat account.
It is easy to buy or sell shares through demat account. Most of
the transactions are being done through demat account.
You may open it in nationalized bank, private bank and even
from foreign bank
Investors are eligible for bonus shares and dividend if they are
holding shares in physical mode or through demat account. if it is demat
account it will directly get credit in demat account
Whenever you apply for shares like in IPO etc, Demat account is
mandatory. If you are allotted any shares, it will automatically be
credited in your Demat account. Similarly, if you buy shares, no
physical certificates are issued nowadays, it will reflect in your Demat
account. Same process is for selling. Pan card is mandatory for
opening of Demat account.
Demat account allows you to buy, sell and transact shares
without the endless paperwork and delays. It is also safe, secure and
convenient. Demat refers to a dematerialised bank account where actual
money is replaced by shares. You have to approach the DPs remember, they
are like bank branches, to open your demat account. Lets say your portfolio
of shares looks like 1000 shares of GMR infra it will directly reflect in my
demat account
instruction for debt instrument. Redemption date: On redemption, the
ISIN associated with the instrument is ed-activated in the NSDL
system. Allotment in Demat Form Any new instrument can be issued
directly. An Issuer may offer demat facility for its debt instruments by
sending a request to NSDL detailing the type of instrument, along
with a Letter of Intent. On receipt of the request, a tripartite
15 days from the closure of the IPO. The shares should get
credited to the respective bidders de-mat account within two working days
from the date of allotment. The refund orders are also dispatched, the offer
must be open for at least three days. The BRLM declares the issue price
before the allotment, which must be completed within 15 days from the
closure of the IPO. The shares should get credited
Once a demat account has been started, it is not possible to
change the account name.
In such case a new demat account needs to be opened in the
changed name, securities are to be transferred from the old account to the
new account and the old account needs to be closed.
Even though a power of Attorney holder cannot open a demat
account, it is permissible to be operated by both the client and the Proof Of
Address (P.O.A) of account holder.
The different categories of accounts that can be opened under
an individual demat account are Ordinary Resident, Hindu United Family
(HUF), Non Resident Indian - Repatriable, Non Resident Indian- Non
Repatriable, Margin , Promoter, Others.
The different categories of accounts that can be opened under a
corporate demat account are Body Corporate, Bank, Financial Institution,
Foreign Institutional Investor, Overseas Corporate Body & Others.
Depositories and Depositary Participants :
For a tyro stock trader, it is necessary to be aware about the
terms Depositary and Depositary Participants.
A depository is a place where the stocks of investors are held in
electronic form. There is only two depositories in India, The National
Securities Depository Ltd (NSDL) and the Central Depository Services Ltd
(CDSL).
Under the arrangement, the Depository acts as registered owner
of the securities in electronic form in the books of issuing company and the
client will be the beneficial owner.
The Depositary Participants are the agents governed by Depositories
through which one can operate the demat account. Depository participants
are mainly banks and brokers. There are over a 100 DPs in India.
A comparison of the fees charged by different DPs is detailed below.
But there are three distinct advantages of having a demat
account with a bank — quick processing, accessibility and online
transaction.
Generally, banks credit your demat account with shares in case
of purchase, or credit your savings accounts with the proceeds of a sale on
the third day.
Banks are also advantageous because of the number of
branches they have. Some banks give the option of opening a demat account
in any branch, while others restrict themselves to a select set of branches.
Some private banks also provide online access to the demat account.
So, you can check on your holdings, transactions and status of requests
through the net banking facility.
A broker who acts as a DP may not be able to provide these services.
9 Procedure to close demat account
For closing demat account investors need to fill account closing
form. Under closing of demat account investors can transfer shares through
other broker or transferring shares on any other names.
Investors can sell shares and then can collect balance amount
cheque. For closing demat account he should have positive networth and
should not have negative networth.
If he or she has negative netwoth then he or she has to make cheque
in the favour of the broker and then only she can close demat account.
After closure of demat account investors cannot trade or buy or
sell shares and balance amount will be credited in the customers account.
Normally nowdays different broker provides customised services to
the reatil investor and to high networth investor.
Nowdays broker provides cheaper brokerage to the retail investor
and to high networth investor so they do not opt for closure of demat
account.
Broker also provides stock trading tips to the investor whenever they
feel it is worth putting money in it and they also provide stock details to the
investor through postal delievery of statements to the investor whenever any
transaction is done in the account by the investors.
Broker also provides SMS facility to the investor whenever they buy
or sell shares as to avoid unauthorised trade practices.
These are the attractive schemes provided by the broker to the
investors so that they do not close the demat account.
10 Why investor close demat acount ?
Investor can close demat account as per his or her wish if investor is
not satisfied with the service or brokerage provided by the broker.
Normally reasons for closing demat accounts are closed by the
investor on account of frequent loss on investment or trading activity , less
reliable trading tips provided by the stock broker , high brokerage rate, no
exposure towards shares by way of loan against securities , less personal
attention towards account holder and investor normally close account due to
high volatility of the market.
It is always advisable that trading in equity or in risky assets should be
done with due care and diligence and one must risk factor or one should
evaluate risk in the investment for avoiding trouble and inestment should be
done with due discipline