Anyone interested in stock markets and wanting to invest or undertake transactions directly without the hassle of a physical presence and cumbersome paperwork can do so by opening a Demat account. A Demat account is backed by either the National Securities Depository Limited (NSDL) or Central Depository Securities Limited (CDSL) which in turn are regulated by Securities and Exchange Board of India (SEBI), and the account unique to each individual allows you to store your securities that you purchase or trade.
Given the importance of the Demat account, prospective investors often have the question - “can i open a Demat account without a broker.”
1. To open a Demat account where you dematerialise your shares and securities, you need to approach with the help of any Depository Participant (DP) such as banks or brokers. There are two DPs – NSDL and CDSL. There is a difference between the two DPs. NSDL has the National Stock Exchange as its main stock market. The CDSL has Bombay Stock Exchange as the primary market for trading and investing.
2. A number of banks offer a three-in-one scheme where the investors need to create a bank, trading and a Demat account. You cannot have a Demat account without a trading account. Experts say that it is more convenient to go for the three-in-one scheme.
3. The investors cannot have a Demat account alone, as it acts only as a repository of stocks. For the purpose of making a sale of purchase, the investors need to have a trading account. The bank account is useful is the transfer of the amount, if any, gained through such transactions. This trading account, however, is managed by a broker. It would be provided by the DP you have chosen for business.
So to answer the often asked question - “can we open a Demat account without broker,” while you can open a Demat account through a DP, you need a broker to manage the trading activities through traders account, though duties and the fees of such brokers are duly mentioned while you are surveying their services.
It is possible to open a Demat account without a broker through DPs but in order to participate in the stock market transactions, you have to open a trading account with the help of some SEBI registered broker/sub-broker. You can find many brokers who offer services at minimum brokerage charges.
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