Over the past few years, India’s securities market has weathered several storms and proved its fundamental strength and resilience in the face of national and international events, including the global pandemic. Investing in the market has become more accessible and feasible even for first-time investors and retail investors.
In order to invest in the market, you must have a trading account and a demat account. Amongst the many demat account benefits is safe storage of securities and easy access to your investment portfolio. In this article, we shall discuss the benefits of linking your demat account with your trading account.
What Is A Demat Account And Trading Account
The mechanism of trading in the Indian securities market is built on several key pillars, and demat and trading accounts are amongst those. To place an order in the market, you require a trading account.
Once you have a trading account, you can choose the securities you wish to purchase and place buy orders for those through the selected broker’s trading platform.
When the order is matched and the transaction is executed and settled, the securities get credited in a dematerialised format in the linked demat account.
How To Link Your Demat And Trading Accounts
You can open a two-in-one demat and trading account with the same authorised stock broker or financial institution. Alternatively, you can opt for separate brokers for your trading account and demat account based on the trading and demat account benefits. In order to ensure a seamless trading experience, you must link your trading and demat account. Here is how you can do it:
- Open a trading account (or a free trading account).
- Open a demat account (or a free demat account).
- Submit a demat account linking form with all the relevant account particulars to the stock broker with which you have a trading account.
- Wait for the successful linking of your trading and demat account.
Five Key Benefits Of Linking Your Demat Account With Your Trading Account
There are several advantages of linking your demat account with your trading account, some of which are:
1. Seamless Trading Experience
Once you have linked your demat and trading account, you can enjoy a seamless flow of securities to and from both accounts. After the settlement of purchase orders, the securities shall get transferred to the linked demat account.
For sales orders, the securities that are sold shall get debited from the linked demat account. The whole process of order settlement shall, therefore, become smooth.
2. Ability To Access Demat And Trading Account From The Same Platform
If you link your demat and trading account or open a demat and trading account with the same broker, you can access account details and portfolio holdings through the same platform. This can prevent the hassle of having to login to multiple platforms to check your demat and trading account.
3. Low Chance Of Default On The Delivery Of Securities Post Sales Orders
By linking your demat and trading account, you can ensure that there is minimal chance of default for the settlement of your market-linked orders, particularly sales orders.
4. Assistance In Timely Investing Decision Making
After linking your demat and trading account, you can be better placed to make timely investment decisions.
Should you identify a buy or sell opportunity, you can simply go ahead and place the order (after adding the required funds to your trading account and in case of purchase orders and insufficient balance). Similarly, for sales orders, you can directly check how many shares/ units you have of the asset to be sold by checking your demat holdings.
5. Convenience And Savings Of Time
Once you have linked your demat and trading accounts, you need not connect the two accounts repeatedly. This saves a lot of time otherwise spent in entering account details with the potential of human error in the process.
To Sum It Up
Before opening a demat account, you must assess various offerings and select the one with the required demat account benefits. You can choose to open a free trading account and demat account; however, such accounts usually have a limited range of features. Your demat and trading accounts can either be linked from the onset (if opened as a two-in-one account) or be linked at a later stage.
