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How Many Demat Accounts Can Be Opened In India?
Holding a Demat and Trading Account is necessary if you want to invest in the Stock Market. A Demat Account is a depositary that holds your shares electronically. A Trading Account enables you to trade shares in the market. Both accounts work closely with each other to ensure a seamless transaction. Many investors have a common question: How many Demat Account can you open in India? Let us answer this question.
· You can open any number of Demat and Trading Accounts in India. However, there is one condition. You cannot open more than one Demat or Trading Account with the same Depositary Participant or brokerage firm. You need to move to another brokerage firm to open a new account.
· Your Demat and Trading Accounts should be linked to the PAN Card. The Securities and Exchange Board of India tracks all your investments through the card. With every new account you open, you need to complete the KYC procedure and link your PAN Card.
· Opting for multiple Demat Account opening is beneficial as it allows you to segregate your shares systematically. For instance, if you invest in the stock for trading and to meet long-term investments, you can segregate your shares accordingly. This helps monitor your investment performance better.
· Holding multiple Demat Accounts allows you to park your shares securely. The DP or brokerage firm can access your shares. They can only access and trade your shares when you give them the authority to do so.
· Every brokerage firm is known for offering a specific service. By opening multiple accounts, you can access the best services offered by various brokerage firms. Every firm brings its expertise with the market research reports they prepare. You can upscale your market knowledge and make better investments by reading these.
· Every Demat Account has an Annual Maintenance fee associated with it. This amount varies for each brokerage firm. You get charged even if your account is non-operational. Note these charges before opening an account. The lower the fee amount, the better it is.
· Remember to keep all accounts active. If the account is non-operational for a prolonged period, the broker freezes them. You must complete the KYC procedure to reactivate and trade from your account.
Furthermore, remember that you need not open multiple Trading Accounts for multiple Demat Accounts. You can link them all to a single Trading Account. This way, you only need to access one account to buy and sell shares. With the digital access provided for these accounts, you can check them anytime. If you find unauthorised shares of credit or debit, you should alarm your brokerage firm about the same.
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An Informative Guide On The Derivatives Market
A financial exchange where you can trade Derivatives is called the Derivative Market. Derivatives Trading happens over the counter or on an exchange. Exchange-Traded Derivatives are made up of Futures and Options contracts, although OTC markets may also include Swaps and Forwards besides Futures and Options contracts.
A massive chunk of Derivatives is unregulated and has higher counterparty risk. These financial instruments assist in generating money by placing a wager on the underlying asset's future value. Derivatives get their name since the value comes from the underlying asset. For instance, wheat producers and bakers employ Derivative contracts to manage their risk. The farmer worries that a price decline will reduce his revenue.
Thus, the agreement guarantees a fair price for the specified good. The baker joins the contract to protect themselves from losses if the price increases.
What are its uses?
On exchanges, Derivatives are freely traded and may be used to meet a range of purposes, such as the following:
Hedge investments: You can utilise Derivatives to protect your assets from price changes. Investing in a Derivative contract can provide downside protection to shareholders. Additionally, it protects you increase in the share price you intend to buy.
Risk transfer: The primary purpose of Derivatives is to shift risk from those who are risk averse to those who are risk takers. A risk-taking investor may engage in harmful contrarian bets to make quick money. Meanwhile, a Derivative contract might increase the security of a position for the risk-averse investor.
Profit from arbitrage possibilities: Arbitrage Trading is buying low in one market and selling high in another. Derivatives offer to profit from price variations between two marketplaces.
What are Derivative types?
This market is split into two segments according to the terms and legal provisions, namely:
Exchange-Traded Derivatives: These are contracts exchanged on a controlled market. They are standardised Futures and Options traded on regulated markets. Hence, a down payment is required to open the contract. Investors and traders prefer Exchange-Traded Derivatives because they reduce default risk and follow a set structure.
Over The Counter: Trades made on OTC are personal transactions between two investors. The agreement is done privately between the parties. The trade location is the primary distinction between OTC and Exchange Trading. Additionally, there are no intermediaries involved in the transaction. A deal conducted at OTC does not happen in the market.
Conclusion
Using Derivatives, traders and investors can manage the risk associated with other positions. Investors frequently participate in the Derivatives Market because the return on investment is relatively high than the risk involved.
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Futures and Options Trading Online | ICICI Direct
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How To Open Demat Account In Few Steps | ICICI Direct
With ICICI Direct, India's reputable online trading platform, you may open a demat account online and enjoy other perks including minimal brokerage and a simple online KYC procedure.
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