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what is demat account

Demat account is an account that provides the facility to borrow and buy securities in the stock market, but does not allow physical viewing and touching of the existing shares. Demat account provides an interface between an individual or a corporation through which trading can be done in the stock market.

There are two major types of such accounts:

  • Demat Account: This account is given to the person who has purchased the shares, so that they can be preserved in their existing form in electronic form as per the stock exchange system.

  • Trading Account: This account allows a person to trade in the stock market. Through this a person can buy and sell shares.

These accounts are managed by various financial institutions and follow the rules and regulations of the stock market in India. Demat account is a virtual representation of the stock market which helps individuals to preserve their share wealth.

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