How to choose the correct DEMAT account for yourself?

Deepika Chelani
Updated: 15 Dec 2021, 12:51 PM IST
TL;DR.

There are a few things to consider before opening a demat account. These factors include the DP's prices, ease of use, the reliability and usefulness of their trading platform, and the numerous add-on services depository provide.

While choosing the correct demat account one should consider a few important things like the DP's costs to the simplicity of use, the stability and usability of the trading platform, and the add-on services depository provide.

While choosing the correct demat account one should consider a few important things like the DP's costs to the simplicity of use, the stability and usability of the trading platform, and the add-on services depository provide.

When you are ready to begin trading, you will need to work with a stockbroker to create a demat and trading account. Demat stands for dematerialized, and it refers to an account where your assets are held in a non-physical, dematerialized form.

To open a demat account, you must first select a depository that best suits your needs for trading on stock markets. Let us discuss some factors to consider before choosing the correct demat account.

Difficulties in opening the account

SEBI has mandated that the service provider follow a detailed protocol for opening a demat account. The whole idea of having a demat account is to take advantage of network technology's speed, security, and convenience. 

This implies that your broker should be able to provide seamless online services in all elements of your trading experience, from account opening to trading to handling support requests.

The ease with which a DP (Depository Participant ) opens an account is an excellent indicator of their quality. It is advisable to use that DP to establish a demat account which provides a straightforward, quick, and painless account opening process with little paperwork.

Annual maintenance fees

Even if you leave your account inactive, there are certain fees associated with a demat account. When calculating the cost of demat, you must consider the whole cost of the transaction. Every year, your account will be invoiced for an annual maintenance fee. A fee is levied every time your demat account is debited.

Furthermore, if you request a physical transaction copy or a physical copy of your demat holdings, you will be charged. When your demat request form (DRF) or debit instruction slip (DIS) is refused, a fee is charged to your demat account. Before choosing a demat account, you must consider all of these expenses.

Software and user interface

This is an essential component of a trading platform. While many customers are focused on choosing the cheapest broker with the lowest costs, they often overlook the quality of the broker's trading platform. The majority of your trading time will be spent on your trading platform. You may have a terrible trading experience if it has severe flaws or is inconvenient to use.

A good trading platform also provides the user with a variety of tools for researching and evaluating the market, allowing them to make better, more educated decisions. As a result, in the long term, a competent trading platform may be the difference between generating a profit and losing money.

Brokerage fees

Brokerage fees are the fees charged by your broker or DP in exchange for the services they offer. This is your broker's primary source of income. Brokerage is distinct from the set transaction charges imposed by stock exchanges such as the NSE and BSE.

Brokerage fees, on the other hand, differ from one broker to the next. This means you may evaluate the brokerage fees charged by several brokers and choose the one with the lowest fees to create your demat account.

Mobile apps' availability

It is pointless to have a good user interface if the trading platform does not also offer a quick and dependable mobile app. We spend a significant amount of time on the go. We can track our investments in real-time from anywhere using a dependable mobile app instead of having to connect onto the desktop interface every time.

In addition to being fast, the mobile app must be secure. Before you create a demat account, make sure that your DP offers a quick and trustworthy mobile app.

Transferring a certificate

Shares must be dematerialized and rematerialized on a regular basis by regular dealers. As a result, it is critical that your DP provide these services swiftly and effectively. Before you create a demat account, it is critical that you learn about your DP's certificate transfer procedure.

Other analytical services

Depository participants are gradually broadening their offerings beyond simple account statements. Online analytics such as direct call-to-action for trading customers, industry concentration, real-time valuation, analytics on demat inflows/outflows, timely notifications, and theme concentration have all been introduced by DPs. These are value adds, but as a client, you must insist on these extra benefits.

Broking and Banking interface

Another factor to consider when choosing a demat account is the link between your brokerage and your bank account. Online trading necessitates a user-friendly trading programme as well as the correct linking of your bank account, demat account, and trading account.

There are two-in-one and three-in-one account options available. Brokers with group banking licences provide this service, which connects your bank account, demat account and trading account. Money transfers and a connection between the trading and demat accounts are possible with the 2-in-1 account.

You should only create a demat account after carefully evaluating all of the factors.

First Published: 15 Dec 2021, 12:51 PM IST
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