If you have any concerns please read this collection of frequently asked questions before contacting us. If you are still unclear about something feel free to contact.
A demat Account is an account used for share trading. Demat stands for Dematerialisation. It means holding shares in electronic form. An investor needs to open a demat Account with the bank having this facility. Demat Account is similar to a bank account, the only difference being in Bank you deposit and Withdraw Money, in demat you deposit and Withdraw shares. It is created for trading of shares by investors in open market (secondary market)
The following documents are required for opening a demat account at Edelweiss
A Contract note is a confirmation of trade(s) done on a particular day for and on behalf of a client. A contract note issued in the format and manner prescribed by the exchange and establishes a legally enforceable relationship between the trading member and client in respect of settlement of trades executed on the exchange as stated in the contract note. Contract notes are made in duplicate, and the member and client keep a copy each. The said contract notes should be signed by a trading member or by an authorized signatory of the trading member. After verifying the details contained therein, the second copy of the contract note should be returned to the trading member, duly acknowledged by the client.
Margin buying is buying securities with cash borrowed from a broker, using other securities as collateral. This has the effect of magnifying any profit or loss made on the securities. The securities serve as collateral for the loan. The net value, i.e. the difference between the value of the securities and the loan, is initially equal to the amount of one's own cash used. This difference has to stay above a minimum margin requirement. This is to protect the broker against a fall in the value of the securities to the point that they no longer cover the loan.
When the margin posted in the margin account is below the minimum margin requirement, the broker or exchange issues a margin call. The investor now either has to increase the margin that they have deposited, or they can close out their position. They can do this by selling the securities, options or futures if they are long and by buying them back if they are short. If they don't do any of this the broker can sell his securities to meet the margin call.
After you have bought or sold shares through your broker, the trade has to be settled. Meaning, the buyer has to receive his shares and the seller has to receive his money. Settlement is just the process whereby payment is made by all those who have made purchases and shares are delivered by all those who have made sales.
In a rolling settlement, each trading day is considered as a trading period and trades executed during the day are settled based on the net outstanding for the day. At present, trades in rolling settlement are settled on a T+2 basis, i.e. on the second working day. T+2 means that trades are settled two working days after the day the trade takes place. For instance, trades taking place on Monday are settled on Wednesday, Tuesday's trades settled on Thursday and so on.
It's possible to buy and sell within a settlement cycle many times, which is what traders do. They settle only their net outstanding positions at the end of the cycle. Eg. Bought 100 HLL, Sold 50 HLL Bought 100 Infosys Bought 50 Gujarat Ambuja , Sold 150 Gujarat Ambuja Then at the end of the settlement cycle, you will receive 50 shares of HLL and 100 of Infosys and receive money for selling a net 100 shares of Gujarat Ambuja. In other words, the settlement is made for the net outstanding positions at the end of the settlement cycle.
India's oldest and first stock exchange is the Bombay Stock Exchange (BSE). It was established in 1875 with over 6000 stocks listed. The total number of stock exchanges in India is 22 across cities like Ahmadabad, Bangalore, Calcutta, Chennai, Delhi etc. There is also a National Stock Exchange (NSE) which is located in Mumbai. There is also an Over the Counter Exchange of India (OTCEI) which allows listing of small and medium sized companies. The regulatory agency which oversees the functioning of stock markets is the Securities and Exchange Board of India (SEBI), which is also located in Mumbai.
Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. All these will show in your demat account. So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions.
No, the contract note will be available for the user to view on the website for no charge. Using this free option, the user can simply select the transaction or the date range and view all the transactions for that period. The contract note will be provided online and the user can view, save or print it as per his wish.
Yes, the demat account statement will be sent across to you at regular intervals, so that you can keep track of the status of your account. You can view account details like holdings, transaction history, etc
The initial margin requirement is the amount required to be collateralized in order to open a position. Thereafter, the amount required to be kept in collateral until the position is closed is the maintenance requirement. The maintenance requirement is the minimum amount to be collateralized in order to keep an open position. It is generally lower than the initial requirement. This allows the price to move against the margin without forcing a margin call immediately after the initial transaction.
No, not all stocks are eligible for margin trading. The stock broker enables select shares for trading in the margin segment. These stocks currently account for almost the entire trading volume on the exchanges. Only those stocks, which meet the criteria on liquidity and volume, are considered for margin trading. Technically, the stocks having low impact cost are considered for margin trading. However the stock selection in the margin is at the sole discretion of the stock broker.
The stock exchange ensures that buyers who have paid for the shares purchased receive the shares. Similarly, sellers who have delivered the shares receive payment for the same. The entire process of settlement of shares and money is managed by stock exchanges through the clearing house. The clearing house has been formed specifically to facilitate the transfer and ownership of shares and ensure the process of settlement takes place smoothly.
A stock exchange or a securities exchange is a corporation or mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. In simpler words, a stock exchange facilitates transactions between buyers and sellers of securities.
Liquidity is the key criteria to decide on which exchange to trade. If you are looking to buy/ sell, look to see where you get the best offer/ bid, and trade on that exchange. If you are looking at doing big volumes, check to see at what average price your order will be executed on the respective exchanges. Generally, in liquid stocks, it does not make a difference which exchange you trade your stocks in.
The stock exchange index is a barometer of performance of the market economy as a whole. It is a relative measure of the performance of all or a number of stocks that are traded on a stock exchange. It incorporates the return on stocks, their volumes traded and the shares outstanding. There can be a number of indices relating to a single stock exchange that incorporates the returns on a number of companies. The BSE Sensex and the NSE CNX Nifty are the 2 most common indices in India