The Dematerialized account number is quoted for all transactions to enable electronic settlements of trades to take place. Access to the Dematerialized account requires an internet password and a transaction password. Transfers or purchases of securities can then be initiated. Purchases and sales of securities on the Disadvantages of international trade pdf account are automatically made once transactions are confirmed and completed.
There is no risk due to loss on account of fire, theft or mutilation. Transaction costs are usually lower than that in the physical segment. A demat account also helps avoid problems typically associated with physical share certificates.
For example: delivery failures caused by signature mismatch, postal delays and loss of certificate during transit. Further, it eliminates the risks associated with forgery and due to damaged stock certificates. The biggest advantage of having demat account is that you don’t have to pay for stamp since these are electronically stored which reduces the transaction cost.
India adopted the DEMAT ACCOUNT for electronic storing, wherein shares and securities are represented and maintained electronically, thus eliminating the troubles associated with paper shares. After the introduction of the depository system by the Depository Act of 1996, the process for sales, purchases and transfers of shares became significantly easier and most of the risks associated with paper certificates were mitigated. In 1996, trading began on NSE for shares held in demat account form.
It was the beginning of a new paperless trading stock market trading environment. If an investor buys a share today, it gets credited to the investor’s account in two days.