What is DEMAT Trading?

DEMAT TRADING : Buying and selling electronic shares is just like buying and
selling physical shares. The only difference is trading in electronic shares is simpler
and safer. The steps in the procedure are:
(1) Placing order : When a shareholder desires to sell his electronic share, he
places an order with his broker. After the sell transaction he instructs his
participant by use of a Delivery Instruction (cheque like instrument) to debit his
account with the number of shares sold by him.
(2) Issue receipt intimation : When a shareholder buys electronics shares, he
must inform his broker about his depository account number so that the
electronic shares bought by him are credited into his account. He has to instruct
his participant by way of Receipt Intimation to receive credit in his account.
(3) Payment : Payment for the electronic shares either bought or sold is made in
the same way as in case of physical share certificates.
(4) Transfer of shares : The shares bought by a shareholder are transferred in his
name the very next day of pay out. There is no fear of bad delivery. There is no
formality of filling transfer deeds, affixing share transfer stamps and applying to
the company for registering the shares in his name.
It is important to note that trading in demat shares is possible only in those
stock exchanges whose clearing houses are linked to the depository. The
following stock exchanges are linked to the depository:
(1) Bombay Stock Exchange
(2) National Stock Exchange
(3) Calcutta Stock Exchange
(4) Ludhiana Stock Exchange
(5) Delhi Stock Exchange
(6) Over the Counter Exchange of India (OTCEI)