wHAT Is tHE aDVANTAGE of demat account and their benefits

Advantages of Demat

The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments.

It also helps avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting, and loss due to damage stock certificates. Demat account holders also avoid stamp duty (as against 0.5 per cent payable on physical shares), filling up of transfer deeds, and obtain quick receipt of benefits like stock splits and bonuses.

Demat Benefits

• It's a safe and convenient way to hold securities
• Immediate transfer of securities is there
• 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.
• No odd lot problem, even one share can be sold thus there is advantage
• Change in address recorded with DP gets registered with all 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 account of shares, arising out of bonus/split/consolidation/merger etc.
• Holding investments in equity and debt instruments in a single account.

Benefit to the Company

The depository system helps in reducing the cost of new issues due to less printing and distribution cost. It increases the efficiency of the registrars and transfer agents and the Secretarial Department of the company. It provides better facilities for communication and timely services with shareholders, investor etc.

Benefit to the Investor

The depository system reduces risks involved in holding physical certificates, e.g., loss, theft, mutilation, forgery, etc.It ensures transfer settlements and reduces delay in registration of shares. 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. It provides more acceptability and liquidity of securities.

Benefits to Brokers

The depository system reduces risk of delayed settlement. It ensures greater profit due to increase in volume of trading. It eliminates chances of forgery – bad delivery. It increases overall of trading and profitability. It increases confidence in investors[source:wikipedia].

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