Is it compulsory for every investor to open a Demat account to trade in the capital market?
• Since 99.5 % of the settlement at the stock exchanges is taking place in demat form, an investor buying securities would receive the securities in demat form only. Therefore, investors who actively buy and sell securities need to open a depository account to receive delivery of demat securities. • According to the Depositories Act, 1996, an investor has the option to hold securities either in physical or electronic form. However, SEBI has notified that settlement of trades in listed securities should take place only in the demat mode. Although, trades up to 500 shares can be settled in physical form, physical settlement is virtually not taking place for the apprehension of bad delivery on account of mismatch of signatures, forgery of signatures, fake certificates etc.
