During online trading, the purpose of a Demat account is to hold shares that have been bought or dematerialised (converted from physical to electronic shares), thus making share trading easy for the users.

Dematerialisation is the process of converting the physical share certificates into electronic form, which is a lot easier to maintain and is accessible from anywhere throughout the world. An investor who wants to trade online needs to open a Demat with a Depository Participant (DP). The purpose of dematerialisation is to eliminate the need for the investor to hold physical share certificates and facilitating a seamless tracking and monitoring of holdings.

Benefits of Demat

• Easy and convenient way to hold securities
• Safer than paper-shares
• Reduced paperwork for transfer of securities
• Reduced transaction cost
• No “odd lot” problem: even one share can be sold
• A single demat account can hold investments in both equity and debt instruments.
• Traders can work from anywhere