Opening a trading account, first step to Online Trading

| July 2, 2010 | 0 Comments

Shishir, an IT professional working in a software company is a strategic equity investor. During his busy office schedule he takes 10 – 15 minutes time out to visit online share trading and perform his transaction. There are many people like Shishir are using online share trading portal to invest money. Share trading method is evolved in last couple of decades and now reached to the common man where he is not depending on anyone.

Let’s see the history of share trading method evolution.

Till mid 90’s, shares were traded by “Open outcry method”, where brokers and their staff were trading the shares in by shouting and hand signals. There was lack of transparency as far as investors were concerned. In India, National Stock Exchange (NSE) has introduced electronic trading in Nov 1994. Bombay Stock Exchange had also followed it quickly and introduced electronic trading in February 1995. Electronic trading was transparent and more investor friendly.

Next revolution came in year 2000 when NSE (National Stock Exchange) introduced internet based trading. ICICI Direct (Subsidiary of ICICI Bank) was one of the initial company which picked up the wave and started offering internet trading option to the customers.

With the Online Trading, customer can sit in their office or home and watch the shares and money being credited and debited online using internet.

Here are requirement for Online Trading

  1. Investor should have their saving account in the designated bank. Account will be used to debit or credit the amount for buy and sell of shares.
  2. Investor needs to open a Demat (Dematerialised) account with the NSDL (National stock depository Ltd.), CSDL (Central stock Depository Ltd.) or any other DPs.
  3. Investor needs to open an ‘Online trading account’, which is required to buy or sell the shares. It is administered by the investment dealers.

Service Charges: Here is list of normal service charges.

  • There is no account opening charge on saving account, but sometime customer needs to keep minimum balance as per banks’ regulations.
  • There are annual charges for Demat account. Charges vary as per each DP, between Rs 250 to Rs 1000 per annum.
  • DP also charges for buy / sell of securities and other services.
  • Customer needs to open share trading account with investment dealers which charges account opening charges and then brokerage on each transaction.

Tips for Investor:

  • Open Demat, Share Trading and Savings bank account with same organization, it helps customer to get good deal and single service contact point.
  • Ask your friends and colleague about their experience and feedback.
  • Don’t go lured by lower brokerage or low charges, a single minute delay in transaction can cost you much more than all charges.
  • Ensure best internet connection for your trading.


Ketul H Shah is a Chartered Accountant and an MBA. He has specialized in banking, finance and insurance. He is passionate about consumer rights and actively offers professional advice on consumer-related matters.

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Category: Personal Finance

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