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In a 'demat account' ,shares and securities are held electronically instead of the investor taking physical possession of certificates. A demat account is opened by the investor while registering with an investment broker (or sub-broker). The demat account number is quoted for all transactions to enable electronic settlements of trades to take place. Every shareholder will have a demat account for the purpose of transacting shares. Access to the demat account requires an internet password and a transaction password. Transfers or purchases of securitiescan then be initiated. Purchases and sales of securities on the demat account are automatically made once transactions are confirmed and completed. -------------------------------------------------

Advantages of demat
A demat account also helps avoid problems typically associated with physical share certificates, for example: delivery failures caused by signature mismatch, postal delays and loss of certificate during transit. Further, it eliminates the risks associated with forgery and due to damaged stock certificates. Demat account holders also avoid stamp duty (as against 0.5 per cent payable on physical shares) and filling up of transfer deeds.In India it is coming gradually. -------------------------------------------------

Goal of Demats System
India adopted the Demat System for electronic storing, wherein shares and securities are represented and maintained electronically, thus eliminating the troubles associated with paper shares. After the introduction of the depository system by the Depository Act of 1996, the process for sales, purchases and transfers of shares became significantly easier and most of the risks associated with paper certificates were mitigated. -------------------------------------------------

Demat benefits [edit]
The benefits of demat are enumerated[by whom?] as follows:
* Easy and convenient way to hold securities
* Immediate transfer of securities
* No stamp duty on transfer of securities
* Safer than paper-shares (earlier risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. are mostly eliminated) * Reduced paperwork for transfer of securities

* Reduced transaction cost
* No "odd lot" problem: even one share can be sold
* Change in address recorded with a DP gets registered with all companies in which investor holds securities eliminating the need to correspond with each of them separately. * Transmission of securities is done by DP, eliminating the need for notifying companies. * Automatic credit into demat account for shares arising out of bonus/split, consolidation/merger, etc. * A single demat account can hold investments in both equity and debt instruments. * Traders can work from anywhere (e.g. even from home).

Benefit to the company
The depository system helps in reducing the cost of new issues due to lower printing and distribution costs. It increases the efficiency of the registrars and transfer agents and the secretarial department of a company. It provides better facilities for communication and timely service to shareholders and investors. 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 problems 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

It reduces risks of delayed settlement. It ensures greater profit due to increase in volume of trading. It eliminates chances of forgery or bad delivery. It increases overall trading and profitability. It increases confidence in their investors. -------------------------------------------------...
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