Demat account is Secure from fraud?

March 02, 2019
Alok Kumar
Demat account is Secure from fraud?

Demat account is Secure from fraud?

India is the fastest-growing economy due to which the financial market and the stock market of India are also growing very fast. Daily new Investors enter the market as the financial products are introduced in the market.

As the number of Investors and service providers are increasing the probability of fraud and mismanagement is also increasing. Many numbers of times, the Stockbroker of the Stock market has been found to be involved in the Scams and in some cases, the Stockbrokers are also found guilty for selling the stocks of the client’s holdings without asking from the client.

It is very important to understand the Structure of a Demat account

Securities are held by Depositories in the Stock market

When someone buys the securities through Depositary participants then the role of DP is limited to forwarding the Transaction, DP don’t store the securities. The securities are securely grasped by the depositaries.

The two main depositories of India are Central depositary Services Ltd And other is National Securities Depositary Ltd. Both of the securities are sponsored by the most reputed Institutions and when someone gives an order to sell, then the DP forwards that request to the depositary and then the shares change hands accordingly. This whole arrangement protects the holdings of the investors.

Demat account is Secure from fraud?

Demat account is Secure from fraud?

Limited authority on holdings Stock market

After the Stock market regulators’ guidelines takes place on the supervision of Stockbrokers of the stock market, the probability of misuse of funds in the Demat account and the shares held in the Demat account has reduced exceptionally.

Depositaries and strict regulatory guidelines make your Demat accounts extremely safe from fraud but everyone always needs to be careful.

  • Mostly Demat accounts are opened with online trading accounts so it is very important for you to keep your username and password details secure while using an online trading account.
  • Never set simple passwords like your date of birth or your name for access.
  • Avoid accessing your Demat account through public networks.
  • All the transactions done through online trading accounts are electronically recorded.
  • Check your holdings and transaction records periodically to keep your records clear.
  • Always read all the messages received from then Stockbroker of the Stock market
  • Details of all the transactions related to the Demat account are sent through the SMS only by the broker.
  • If a situation arrives when you have to leave your account without any use for a Long Period of time then you can also opt to keep your account in safe custody.
  • In safe custody it is ensured that no unauthorized transaction will take place.

Conclusion Demat account secure or not Stock market

The introduction of Demat account and electronic trading has made investing in the Stock market very safe and easy and secured to a large extent. All the transactions are done through the Demat account leave an electronic trail which is very easy to follow. So at last we can say that Demat account is as secure as a Bank.

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