FAQs on Difference Between Demat and Trading Account
Discovering the difference between Demat and trading account is a serious point of concern for beginners in the stock market. Most of the budding traders are new to the concept of these accounts and the purpose that they serve. This conflict occurs because the idea of holding shares certificates electronically or buying and selling bonds using an online account is contradicted and confusing to many. In this article we would provide frequently asked questions about difference between demat account and trading account.
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Is there a need to know the difference between demat and trading account?
The fact that traders have to link both these accounts along with their general savings account to establish a successful trade transaction makes them believe that there is no difference between the two. Here are all the FAQs answered that are enough for classifying the difference between Demat and trading account. Investors can use this knowledge to pledge their intellect in the right direction. Remember, the best minds never let their doubts implant a source of confusion in them!
FAQs on Difference Between Demat and Trading Account
Whenever there is a doubt or conflict, let the Depository Participant know about it to get the answers!
Here are some of the FAQs on difference between Demat and trading accountIs
1) It it possible to open Demat Account without Trading Account?
Yes, it is possible to open a Demat Account without having a trading account beforehand. However, it is not possible to trade online without having both. Yes, for trading in the stock exchanges, one has to open the trading account too and link it with his Demat and general savings account. In some cases, investors first open the Demat Account, dematerialise all their existing share certificates and then open the trading account when they are willing to trade.
2) Can I use Trading Account without a Demat Account?
Yes, it is also possible to just have a trading account without the Demat account, and this possibility creates the major difference between Demat and trading account. If an investor is willing to invest only in currency derivatives, futures, and options, then a trading account is sufficient for him as all these investments require cash settlements.
3) Do we need to transfer shares from Trading Account to Demat Account?
Technically, traders do not have to transfer their purchased shareholdings manually from the trading account to the Demat Account. Since both these accounts are linked as soon as an investor opens them, purchases are credited to the Demat account automatically within 24-48 working hours. Similarly, his account will be debited when he will sell his shareholdings using the trading account.
4) Are the charges same for both Demat and Trading Account?
Another difference between Demat and trading account is that the former is available at zero opening charges, but the later might require a minimal amount. The account maintenance charges and other costs depend upon the Depository Participant (DP) that one chooses.
For operating the Demat account, one has to pay a nominal charge for dematerialisation or rematerialisation. In the case of the trading account, the DP charges a broking charge that varies depending upon the type of shares.
5) Is It more difficult To open a Trading Account than Demat Account?
No, there is no such difficulty level or classifying difference between Demat and trading account. Investors can open both the accounts together using the 2-in-1 service of the Depository Participants. The account opening process is easy and can be done online.
6) Does one have to choose the same nominee for both these accounts?
Traders have to mention a nominee while opening their account just like it is mandatory for opening a general savings account. However, the Depository Participants do not obligate the traders to have the same nominee unless they are using the 2-in-1 service. Therefore, it solely depends upon the DP and the account opening procedure.
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7) How much time does it take to show shares in a Demat Account from Trading Account?
In general, it takes T+2 (T=day of trading) time to reflect the balance in the Demat Account after the investor uses his trading account to buy or sell his shareholdings. However, in the case of national holidays, strikes, or any other unforeseen conditions, the time can increase to T+2 or more. Whatever be the case, in the case of delays, the investor is duly informed by the representative or executive of his DP to avoid any hassle.
If an investor has any other questions that they might want to get answered, it is best to consult the customer care of Depository Participant (DP). These kinds of queries are common to beginners, and there is nothing to feel low about being confused about them. All one has to focus on is learning the nitty-gritty and understanding the difference between Demat and trading account.
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I have a demat account with CDSL and trading account with ACMIIL. If I want to open a trading account with Zerodha, can I link existing demat account with new trading account?
Good Morning Sir,
Just one rectification in point no 7….shares reflect in dmat a/c..if sell then same day & if buy then t+2…this started from 1 st sept 2020
Thanks Punit. I have just updated. I am so proud that my blog has readers who go thru the articles, benefit from them and also intimate if there are any minor errors. This is helping me to keep accurate content on this blog. Thank you once again Punit