The parameters to choose the Demat and trading account may vary for each type of trading style. A small investor will prefer a Demat and trading account that does not offer many features whereas a day trader will require features that help in analysis and decision making along with a Demat account with a low brokerage.
Thus Demat account requirements vary from trader to trader. Generally, when you open a Demat account, it is a 2-in-1 account i.e., Demat account and trading account. Here is the general guidance to select the best Demat account along with an online trading account.
1. Tech Specs
For the 2-in-1 account, the stockbroker should provide a robust technology to make the credit and debit to Demat account, funding to the trading account, a smooth process. Check with your stockbroker what features they are providing along with the Demat & trading account.
2. Cost savings
During your search for the best online trading account and Demat account, compare all four Demat account charges -account opening fee, Annual Maintenance Charges (AMC), transaction fee, and custodian fee with different stockbrokers and choose a Demat account with a low brokerage.
3. Corporate benefits and actions
Benefits offered by companies to their stockholders such as dividends, refunds, or interest should be automatically available to their Demat and trading accounts. It should be automatically updated with corporate actions like right issues, bonus issues, stock split.
4. Choose a trustworthy depository participant
Open a Demat account with a credible depository participant because it is going to be the custodian of your financial securities purchased with the hard-earned money. It is necessary to ensure the security of your shares.
5. Customer Support Facility
Check the DP’s standards based on the quality of the primary and ancillary services provided by them. Services like – time taken in the Dematerialisation of your physical shares, automatic credit of corporate actions to your Demat account, check on customer service for dealing with issues like a pledge, lien, and other customer complaints.
6. Safe and Secure
Open a Demat and trading account with a registered broker only that is compliant with all SEBI regulations pertaining to Demat account maintenance and transaction security. It will ensure the safety of the financial assets you are holding in your Demat account.
7. Best Governance Practice
Make sure you invest and trade using a Demat and trading account with transparency and no conflicts. There should be direct Pay-out of securities. It means whenever an investor buys stocks it should not be first taken in the settlement account and then the stocks will be transferred to the individual Demat account. Make sure the broker works with the highest governance standards.
8. Freezing Demat Accounts
If an investor wants to freeze his Demat account for a certain period, it should be done through quick processing. This is necessary to prevent the abnormal or fraudulent activity of debit or credit into a Demat account. In most Demat accounts, investors can freeze a specific quantity of securities for a specific period. This limit may vary from broker to broker.
9. Analytics on Demat Holdings
In order to create healthy competition in the industry, stockbrokers are making more additions to their services than simple account statements for Demat holdings. Online analytics facility is one of them. It includes timely alerts, research data, analytics, industry news, and others. You can ask for such additional advantages from your stockbroker.