Dematerialization (DEMAT)

by khalid on 05/10/2010 · 0 comments

In Share Market, Dematerialization (DEMAT) is the term used to refer procedure through which physical (paper-form) certificates of the securities are usually transformed into electronic form. In the age of computers, paper stock certificates are slowly being removed and retired from circulation in exchange for electronic recording. These days the securities can be registered and credited to the investor’s accounts in his Depository Participant and can be transferred electronically to the buyr’s account as well .

Benefits Of Demat Account :-

1. A safe and convenient way of holding securities (equity and debt instruments both).
2. Transactions involving physical securities are costlier than those involving dematerialized securities. Therefore, charges applicable to an investor are lesser for each transaction.
3. Securities can be transferred at an instruction immediately.
4. Increased liquidity, as securities can be sold at any time during the trading hours and payment can be received in a very short period of time.
5. No stamp duty charges.
6. Risks like forgery, thefts, bad delivery, delays in transfer etc, associated with physical certificates, are eliminated.
7. Pledging of securities in a short period of time.
8. Reduced paper work and transaction cost.
9. Odd-lot shares can also be traded (can be even 1 share).
10. Nomination facility available.
11. Any change in address or bank account details can be electronically intimated to all companies in which investor holds any securities.
12. Securities are transferred by the DP itself, so no need to correspond with the companies.
13. Shares arising out of bonus, split, consolidation, merger etc. are automatically credited into the Demat Account of the investor.
14. Shares allotted in public issues are directly credited into Demat Account of the applicants in quick time.

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