Due to the problems that arose during paper shares, there was clearly a need of a method that would make share transfer, buying/selling of shares, etc. a less strenuous affair.
Consequently in 1996, the Indian parliament passed the types act, which permitted web exchange of shares, therefore which makes it much easier when it comes to agent and investor.
Into the brand new online Trading system, an investor must start a demat account with the Stock Brokers to start out trading online.
A demat account is crucial for an investor to trade online.
Now discussed are a number of the features of trading online:
1) quicker and convenient option to get shares
2) Immediate transfer
3) Zero stamp responsibility on transfer of shares
4) Safer than paper shares, e.g., artificial signatures, wait, thefts, etc.
5) lower documents for transfer of securities
6) Less exchange price
7) No “odd” issues. Also an individual share is sold.
8) DP registers a change in target with all companies. No need for the investor to contact the companies immediately.
9) DP transmission of securities, therefore eliminating the necessity of notifying the companies.
10) automated credit in demat records
11) Both equity and debt tools is held by a demat account
The depository system aids in reducing the spending of brand new problems because of lesser printing and distribution expenses. It increases the effectiveness regarding the registrars and transfer representatives as well as the secretarial division of a company. It offers much better facilities for interaction and timely solution to investors and people.
The drawbacks of web trading are pointed out below:
1) Investors, that dealing the very first time, choose the movement to get immersed in technology and also temporarily forget that they’re really utilizing their a real income.
2) there is absolutely no relationship that a mentor between an expert agent and an internet trading account owner, therefore making the investor on his own to create choices regarding the right shares.
3) people who aren’t familiar with the particulars of the basics of brokerage pc software will make blunders that may show to be a costly affair.
4) This is like any other financial strategy, where your commitment to online trading takes research and dedication to make sure by yourself that everything is up to par. You have to take time out to do your own research where you will have to overcome a great learning curve to make some money from online trading a possibility.