demat account

Topics: Stock market, Stock exchange, Stock Pages: 21 (3899 words) Published: March 1, 2014
International Journal of Management and Social Sciences Research (IJMSSR) Volume 2, No. 4, April 2013

ISSN: 2319-4421

Online Trading and DEMAT Account in India-Some Issues
Dr. Ramesh Onkareppa Olekar, Associate Professor & Coordinator, PG Department of Commerce, Vijayanagar Sri Krishnadevaray University, Post Graduate Centre Nandihalli, Sandur Chanabasappa Y Talawar, P G Department of Studies & Research in Commerce, Karnatak University P G Center, Kodibag, Karwar

The term "market" can have many different meanings. One
usage of the term denotes the primary market and the
secondary market. These two markets distinguish between
the market where securities are created and the market
where they are traded among investors. Their function is
the key in understanding how securities are traded. The
primary market is where securities are created. It's in this market that firms sell (float) new stocks and bonds to the
public for the first time. Secondary market is where most
trading occurs, the secondary market is the one in which
securities are traded after having been initially offered in the primary market. It is basically a market in which an
investor purchases an asset from another investor, rather
than an issuing corporation. This includes the NYSE,
NASDAQ and all major exchanges around the world. The
defining characteristic of the secondary market is that
investor’s trade among themselves. For example, if you go
to buy Microsoft stock, you are dealing only with another
investor who owns shares in Microsoft. Microsoft (the
company) is in no way involved with the transaction.
However there was an improvement in the mechanism of
trading whereby it was seen that there was a shift from the
traditional method of physical trading to the updated
version of online trading.

2008. At present online brokers hold $574billion in assets
but this figure is expected to grow to $4 trillion by end of 2007. The market has become saturated and very
competitive. As the number of players increase, it
becomes very difficult to differentiate. The volatility in US equity, market in 1999 and September 11 World Trade
Center attack has hurt the online brokerage trading
volumes. Established E-brokerage firms have created
bearer to entry that makes it difficult for new player to
enter into the market. Dematerialization the process by
which physical certificates of an investor are converted to
an equivalent number of securities in electronic form and
credited in the investor's account with his (DP) Depository
Party. Only those certificates that are already registered
in your name and are in the list of securities are admitted
for Dematerialization at NSDL/ CDSL. Demat shares are
supposed to obviate all the problems of physical trading.
The biggest attraction of trading in Demat shares is that
the shares an investor buys comes with a clean title and
immediately after the settlement on the relevant stock
exchange. Buying shares in the Demat form always
guarantees the investor a good title as soon as the
settlement is over and hence it is a preferred mode of
trading today and will be so in the future also.




Online brokerage has grown substantially since the
introduction of Internet and now account for 40%-50% of
retail trade. This change has come in because individual
investors want to increase control over their finances and

do not want someone else to manage the money. Online
trading has become very popular in last couple of years
because of convenience of ease and use. Numerous
companies have gone on-line to meet their customer‟s
demands enabling them to trade when they want and how
they want to. Online trade, which now accounts for 50%60% of all retail trade, is forecasted to increase to 70% by

Online trading and Demat are the two emerging...

References: [4] Mrs. Archana Sinha (July 2008) “Micro –Finance”
[6] Levy International Finance , (2003) TMH New
[7] IAN Giddy, Global Finance Market,(2007) AITBS,
New Delhi
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