There are literally, and figuratively, tens of thousands of individuals who wish to open a demat account today. Share market trading and investing had reached a “boom phase” a little while ago, and although the enthusiasm may have died down somewhat, several individuals still open demat accounts and start vigorous investing activity in the share markets. Individuals who shy away from the stock market may do so due to the risks involved in stock trading, or due to its online nature and safety concerns. If you are bothered by security concerns, two-factor authentication in demat accounts should abate your worry.
You may be wondering why you should have to open a demat account at all. Well, if you want to invest in stocks, especially for the long term, a demat account acts as an electronic storage facility for the shares you hold. It is also linked to a trading account and this enables you to trade in different shares (purchase and sell shares). Both these accounts are linked to a bank account which allows the seamless inflow and outflow of cash to conduct trading transactions.
With all these accounts linked, it is natural that investors are concerned about security from cybercrime. Therefore, it is no wonder that the National Stock Exchange (NSE) has announced, in a recent circular of 14 June, 2022, that two-factor authentication will be mandatory for demat account access. You should be aware, especially if you want to be a part of the share market today, of certain highlights of this move.
You can open a demat account with a bank or a reputable broker. To invest in stocks, you must have a demat account, but other stock investments like any upcoming IPO subscription or mutual funds do not need you to open a demat account. Of course, with your financial transactions across more than one channel, you should make sure they are secure. Currently, to log into your demat account and other related accounts, you require a password to gain access securely.
To make security of online demat transactions even tighter, trading in the share market today requires funds to be guarded at all times. Hence, the NSE has now introduced the mandate of two-factor authentication, that is, the access to a demat account using a dual authentication process instead of a single one. Here are the features that translate to benefits when you use two-factor authentication:
Two-factor authentication gives users not just additional protection while engaging in trading activities, but encourages investment in the share markets. If you wish to open a demat account, it's easy and you need not have any security concerns. While you plan on investments in direct equity, you can also check any upcoming IPO that suits your investment needs.
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