If I am doing only intraday equity, I will never take delivery, so am I told to either map an existing demat account or open a new account? In any case for F&O trading you don’t need a demat account.
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Assume you buy a stock for Intraday and the stock hits lower circuit. Now you wouldn’t be able to sell the stock because there are no buyers. In such case you are forced to take delivery of such stocks. If you don’t have a Demat account where are the shares to be transferred?
Therefore the Exchanges have made it mandatory for any client trading in the Equity segment regardless of whether its Intraday/Delivery to have a Demat account mapped.
For F&O as you’ve mentioned, there is no necessity to open a Demat Account.
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Yes Mr. AndrewMan, you don’t required demat account for F&O trading. Whereas, if your a intraday equity trader than you should have demat account and this is because, if any circumstances the stock reach circuit limit i.e., lower or upper, the stock should compulsorily delivery to your demat account. This is when, your long or bought stock on intraday. If your short on stock than, it goes to Auction market for the settlement.
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Demat Account is De Materialized account. Means your securities which are in the form of Material are converted in to electronic form and carried away till you hold them. It is similar to the bank account where your security cash is held in the form of electronic form.
Since you are trading (Buying and Selling) the securities in Market there will be some cases where intraday trade’s fails due to circuit limits on the stocks (upper limit and lower limit), in those cases delivery of securities are mandatory. So to hold securities you need Demat account.
In some countries F&O settlement happens both in cash and physical form. Currently in India there is only cash settlement for F&O. In future regulators can avail the facility of physical settlement also for which Demat account is mandatory.
For F&O we dont required a Demat Account.
For intraday equity if it reaches some limit and if we want to hold it we may require a demat so it is mandatory to have a demat for equity
Brokers cannot hold ur shares in case of default or auction. they will insist on a demat account.
Previously the shares would stay in the pool account of the broker, but this was causing compliance issues because of which the new rule was brought in.