Showing posts with label demat account. Show all posts
Showing posts with label demat account. Show all posts

Tuesday, 3 April 2012

The need of commodities in trading.


Commodity markets are markets where raw or unfinished products are exchanged. These raw commodities are dealt on regulated commodities exchanges in which they are purchased and sold as per the standardized contracts.
This article emphasizes on the past and current arguments regarding global commodity markets. It covers physical products such as food, metals, electricity but not particularly about those services, including the stock markets, bond markets and currency markets that need to be addressed separately as issues in more depth.
The focus of this article is more on the relationship between money involved with simple commodities and the more complex instruments that are offered in the commodity markets.
The modern commodity markets have their traditional roots in the trading of agricultural products. Wheat, corn, cattle and pigs were widely used as standard trading instruments in the 19th century in the USA. Other basic food materials such as soybeans were added only recently in most markets.
For a commodity market to be established there must be a broad consensus on the variety in the product that make it acceptable for different purposes.
The economic impact in the development of the commodity markets is hard to overestimate. Throughout the 19th century, the exchanges became effective spokesmen for and innovators of improvements in the transport system, warehousing and financing which paved the way to expand the international trade.
Since the ancient Sumerian use of sheep or goats, people used pigs, rare seashells or other various items as commodity money, people have found different ways to standardize and then trade contracts in deliveries of such items to render trade to make it smooth and predictable.

Commodity money and the commodity markets in a crude early from are  believed  to have been originated in Sumer where small baked clay  tokens in shapes of sheep, goats, were used in different forms of trade.
Sealed in various clay vessels a number was written outside that represented a promise to deliver that particular number. This made them a form of commodity money.  – More than a I.O.U but less than a guarantee of the total number that was outside but more than an I.O.U. but less than a guarantee by a nation-state or bank. However, they were also known to contain promises of time and date of delivery - this made them like a modern futures contract. Regardless of the details, it was only possible to verify the number of tokens inside by shaking the vessel or by breaking it, at which point the number or terms written on the outside became subject to doubt.

Monday, 26 March 2012

Demat Account In India


In India, a Demat account means dematerialized account for people to invest in securities online.
The investor opens a demat account while registering with an investment broker. This account number is used by the broker for all transactions that are used in online stock trading.
To access a demat account, the investor requires an internet password and a transaction password. This allows an initiation of buying or selling of securities on the demat account.
A demat account reduces brokerage charges considerably. It makes transfer of shares easier, enables quick ownership of shares by settlement resulting in an increased liquidity.
It also avoids confusion in ownership of securities and provides easy receipts for public issue allotments.
In the last 15 years, the capital market in India has witnessed an unprecedented boom. However, in the early 80's a lot of paperwork and tedious maintenance meant that the common man kept himself away from the capital market.
Due to overwhelming number of paper shares they were becoming increasingly tedious to maintain and archive.
Problems like fake and stolen shares, forged signatures, mismatch of signatures, duplication of shares, transfer problems plagued the traditionally paper based trading and settlement system.
To top it all, the system had some very irritable procedures and an overdose of paperwork that made retail and institutional investors from entering the capital market. Investors felt that they were gaining less for the risks undertaken by them.
Lack of modernization in a large and inefficient system became a major hurdle to the growth of the Indian capital market.
Thus, Indian stock market adopted the Demat system for electronic book-keeping where the securities are represented and maintained electronically. It erased the troubles that one would associate with paper shares.
After the introduction of the depository system by the Depository Act of 1996, the procedure for buying, selling and transfers of shares became much easier and most of the risks associated with paper certificates were eliminated.
Advantages of a Demat Account:
1. Convenient, easier and safer ways of holding securities
2. Instant transfer of securities
3. Zero stamp duty on transfer of securities
4. Less transaction cost
5. Even a single share can be sold or purchased
6. Flexibility for traders to work from anywhere
7. A single demat account can hold both equity as well as debt investments
8. Address change recorded with a DP will get registered with all companies in which the investor holds his securities, thus it erases the need to contact all of them separately and save time.
B Vaibhav is working as an SEO in Angel broking. Angel Broking is one of the best stock broking and wealth management companies in India. Angel Broking offers various products and services to Indian investors including online stock trading, mutual funds, derivatives trading, commodity trading, IPO, PMS and investment advisory services.