post 11
Dated12/5/2020
Setting Up Trade
snippet Today we will explore How as an investor we can purchase Shares

To purchase any shares from the stock exchange we need to have an account with the stock exchange. We have seen in previous posts that the trading was changed to electronic form in 1995 after the establishment of NSE (National Stock Exchange). The shares that we purchase form stock exchange are stored in Demat form (dematerialized form) in a special account called Demat Account.
Like all accounts we have are registered with an organisation like a bank for a simple bank account. Here the Demat account is registered with an organisation called Depository.
The depository is an organisation that host your Demat account and is responsible for creating dematerialized forms of existing shares if they exist.
There are two depositories registered with SEBI in India, these are CDSL(central depository services limited) and NSDL (National securities depository limited ).
But wait Demat account can only hold shares like a reserve. In order to conduct the transactions, we need to have a separate account called Trading account that holds the money and executes the orders.
In order to open an account, we need to approach a broker or an investment firm which on-demand and on completion of all the KYC (know your customer) norms opens a trading account and provide us with a trading login credentials. These can be used on a compatible trading software like NEAT (National Exchange for Automated Trading).
There are software and mobile trading apps like Upstox (I have an account with them) and Zerodha I don’t promote any of these it’s your wish and choice to open an account.

Now to trade efficiency you need three accounts, namely bank account + trading account + Demat account. These days the need for all these is being fulfilled by a new concept called 3 in one account that has all the features and is less cluttered.

Happy investing