When you open an account in a bank, you can deposit your cash there and it remains safe. You can also withdraw the cash, and conduct many other transactions with it. If you want to trade in the share market, you have to do so through a trading account. To have a trading account, you must open a demat account first. You are able to conduct your share transactions, buying or selling stock, seamlessly with these accounts. These accounts are linked to your bank account so that cash is available for you to trade online when you wish to seize an opportunity to trade.
A demat account can be opened with any DP or depository participant. This is an authorised entity, like a brokerage or a bank, which is enabled to open a demat account on behalf of any retail investor. A demat account securely stores all the securities owned by an investor in digital format. These securities may be stocks, bonds, ETFs, and any other securities. In the event an investor wishes to gain access to details of the securities they own, they can do so with a Client ID. This is a unique verification code that is given to any demat account holder.
As a bank account has a bank account number that is unique to any individual account holder, a demat account holder also has a distinct account number. This is the demat account number. However, this is not a Client ID in a demat account. The account number along with a Client ID may be used to access details of your demat account. With both numbers, you can get information about your securities whether they are stocks or bonds. In case you wish to invest in any upcoming IPO, you would also need a demat account if shares are allotted to you. Then you would get access to details of these shares through your account numbers.
If you open a demat account with a reputed broker like Motilal Oswal (a depository participant or DP), you will be given a Client ID that is unique to you as an account holder. This is an eight-digit number which is used by a depository participant to accurately identify customers and clients. The Client ID is generated by the DP and this is done by means of a specific formula that is created by the DP. This is not affected in any form by the depositories themselves.
To know how to operate a demat account after you open a demat account, you must know the difference between a Client ID, a demat account number and the DP ID. These numbers and their purpose is crucial in the smooth functioning of a demat account. You can always log on to Motilal Oswal to educate yourself regarding the different aspects of a demat account. At Motilal Oswal, you can also check out any upcoming IPO you may wish to subscribe to.
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