If you are going to trade in equities, currency, derivatives, commodities, or Mutual Funds, then having a Demat account is mandatory. A Demat account helps you to hold your securities electronically in a format that enables you to switch between trading security holdings without the hassle of a physical share certificate. In this article we will know about the benefits of demat account and what is role of Depositary Participants.

A Depositary Participant (DP) is an intermediary between the investor and the depository. There are two depositories in India:
• National Securities Depository Limited (NSDL)
• Central Depository Services Limited (CDSL)

The DP operates based on a license issued under the depository. For that, a license is issued under the Depositories Act of 1996. They can open and maintain Demat accounts on behalf of the investors.

Every DP is assigned a DP ID by NSDL or CDSL. Once you open a Demat accountwith a DP, the securities you buy will be credited to that account but you continue to hold ownership rights of those securities. In fact, it is the DP that helps you in buying and selling securities and, accordingly, credits or debits your Demat account based on your trading activity.

How to Find Your Demat Account Number?

The very moment you open your Demat account, either NSDL or CDSL will send a letter or an email to you, stating the 16 digit demat account number.

If your account is with NSDL, then the first word would be 'IN' followed by a 14 digit number. For example, IN47368696536797.

In case the Demat account is with the CDSL, then he gets a 16-digit alpha-numeric Beneficiary Owner ID (BO ID), without alphabets, such as 1284653414677645.

Your Demat account number has two parts:

• The first eight digits are the DP ID that signifies the Depository Participant.
• The last eight digits are the client ID unique for every investor.

Why Does the Demat Account Number Matter?

Your Demat account number is the most critical number for every transaction that you make in the secondary market. In general, the primary purpose of opening a Demat account is to avoid the requirement of physical share certificates and thereby reduce the risks that arise from theft, forgery, or loss of securities.

And, owning a Demat share makes it possible to transfer securities between sellers and buyers quite quickly, making it an efficient market. An individual cannot carry out trading on the stock exchanges in India without any valid Demat account number.

Opening a Demat Account

With all tech advancements, it's easier for people to open a Demat account in less than twenty minutes. Here's the detailed guide to get you started:

• Select a DP:

  
  Only a SEBI-registered DP can open a Demat account. This can be a bank, a broking firm, or any other financially empowered organization licensed to carry out the Demat services.

• Fill up the Application Form:

  
  After choosing a DP, fill up the application form for opening up the Demat account. This can be done on their website.

• Submit KYC Documents:

  
  Submit necessary KYC documents. In most cases, these include your:
  - Aadhaar card
  - PAN card
  - For financial requests: Keep your bank account details handy
  

• Verification:

  
  The DP shall verify the documents so submitted with respect to identification and address. Verification can be either in-person meeting or video KYC.
  
  In this manner, your Demat account would be activated after the verification is done. Your 16-digit Demat account number will be provided to you, and you can then begin the trading of securities.

Why a Demat Account is Important?

Indian financial markets have always kept opening a Demat account important for trading. This account simplifies holding, transferring, or trading securities while providing enhanced security and convenience. With your unique Demat account number, you get to access various markets-from equities, commodities, and mutual funds-all under one roof.

Regardless of whether you are a new investor or already an old hand, opening a Demat account would be the first step into building an investment portfolio for you. Do not forget to choose a reliable Depository Participant (DP) and follow the right procedures, so you can enjoy smooth trades in this dynamic market.