Safeguarding your stock market assets is just as critical as securing tangible assets such as gold and silver. Just as you ensure that all your valuable jewellery and expensive items are securely stored, you must also pay equal attention to the security of your shares and financial instruments. In a way, a Demat account is a kind of safe and secure locker that maintains your shares and securities in a dematerialized format electronically. Through a Demat account, you receive numerous benefits and a seamless and convenient way of trading in the financial markets.

With the introduction of Demat accounts being made mandatory to invest in the stock market and to trade online, a wide range of issues and obstacles concerning physical certificates of shares and securities have now been eliminated.

Through your Demat account, you maintain your shares and other securities with a depository participant or a broker such as Kotak Securities. However, just as a Demat account is similar to a savings bank account, you could be exposed to various kinds of hazards that could come in the way of seamless and safe trading. For instance, an individual may be able to gain access to the details of your Demat account. However, through a Demat account, you can track the identity of the individual or the entity who is illegally and unlawfully trading from your account.

To prevent unauthorised transactions, you need to:

  • Update your credentials accurately and regularly: in order to avoid illegal transactions from your Demat account, you need to update your mobile number and email ID with your broker or your bank. Doing so can ensure that you receive timely notifications and alerts of all the transactions. In addition, every related transaction that takes place from and through your Demat account including credits and debits will be sent as a notification on your updated mobile number and email ID.
  • Go through your Transaction statements: all depository participants provide investors with transaction statements on their Demat accounts that list the details of credits and debits taking place in a specified period. These transaction statements are critical in allowing you to understand the trading activities that can take place in your account based on your records. You can use a transaction statement as legal evidence of your portfolio with your broker. If you suspect that your inactive or dormant Demat account has had some activities without your knowledge, you can request a copy of your transaction statement from contact depositories such as the NSDL or CDSL.

It is essential to take the necessary steps on your trading activities to ensure that there are no irregularities in your Demat account. You can choose to freeze your Demat account if you wish to take a brief sabbatical from making investments. This can help to prevent unlawful access to your Demat account without your permission. To do so, you will have to inform your broker in writing to stop all or any transfer of shares from your Demat account until your written authorization.

By Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to [email protected].