BANGALORE: A demat account is a must for trading in stocks and ETFs. Importantly, it does not attract stamp duty. In the last decade, the stock market has moved towards paperless trading. For investors, who used to burdened with reams of stock certificates, a demat account has become a necessity. Not having a depository or demat account has now become the biggest entry barrier to investing in equities.

It is no wonder that more and more entities are moving to the dematerialised form of trading. A demat or 'dematerialised' account holds shares in electronic form, thus saving you the bother of holding shares in paper form.

What are the features of Demat Account?

1. Dematerialization and Rematerialization of Securities

A process by which paper certificates of an investor are taken back by the company and equivalent number of securities is credited in electronic holdings of the same investor is called dematerialization. This is to avoid problems of the paper certificates such as mutilation of share certificates, forged certificates etc.

Depository discharges the function of providing the paperless electronic or dematerialized security transactions. A bank is called depository where the securities are held in electronic form. Re-materialization is the conversion of electronic holding to papers by printing of new share certificates.