What is the difference between trading account and dmat account in share market?

[Fundu Vishy]

A Demat Account is an account where you can keep your shares in electronic format. It is similar to a bank account - except that instead of keeping money, you keep securities in this account. The account has facilities for 'transfering' securities from your account to some one else's demat account (as much as you can issue a cheque from your bank account which gets transferred to someone elses bank account). You open your demat account with a Depository Participant who are associated with either of the two depositories in India National Securities Depository Ltd. (NSDL) or Central Depository Services Ltd. (CDSL)

A trading account is one where you have the Access for buying and selling securities in the Stock market. This account enables you to participate in the equity market like NSE / BSE. This account, you open with a stock broker who is a member of NSE / BSE or any other exchange. Having a Bank account and a Demat account are pre requisites for opening this account. While the bank account will be for the purpose of transfer of funds when you buy / sell stocks, the demat account is for transfer or securities when you buy / sell them.

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