How to understand share market :

Dematerialisation is the process by which a client can get physical certificates converted into electronic balances.

Dematerialization is the process of converting your physical assets into digital or electronic form.Now inthis era you can see dematerialization in every form of business.

Using a debit card at a store creates a digital record of purchase and the amount is deducted from the cardholder’s account. Funds are exchanged between buyers and sellers without paper currency. Like.. Mail(post)-convert into E -Mail,Mat account converted into Demat account.

Materialized forms are converted into dematerialization, that they are can traded in share market. Like metal form of gold, silver, zinc, copper, water aluminum,every metal that you buy in metal form in this world also you can buy these metals into dematerialization form (In digital or electronic form).

Dematerialization in share market:

In earlier eras, transactions at stock exchanges were conducted by traders who shouted buy and sell prices. The deals were recorded on paper receipts. After the markets closed, the paperwork would continue in order to properly register all the transactions.

The introduction of dematerialization served to eliminate such a paper-oriented process.

Dematerialization, so-called DEMAT accounts allow for electronic transactions when shares of stock are bought and sold. Within a DEMAT account, the certificates for stocks and other securities of the user are held as a means for seamless trades to be made.

Dematerialization applies not only to stocks, but also to other forms of investment such as bonds, mutual funds, and government securities.

Process of Dematerialization 

Dematerialization of certificates or shares begin with the opening of demat acount with a Depository Participant (DP) of his choice.

An investor needs a Demat account to request the dematerialisation of the shares and securities he holds.

An investor selects a DP or stockbroker through whom they want to convert their shares into a dematerialised form.

They need to complete the account opening process, which requires filling out a form and submitting relevant document proofs along with completing the KYC.

They can then submit their request for dematerialising the share certificates.

A depository (National Securities Depository Ltd. and Central Depository Services (India) Ltd.) has the responsibility to store the shares electronically.

The depository informs the DP about the dematerialisation and the asset holdings reflects in an electronic form in the shareholder’s demat account.

Benefit of Dematerialisation

Carrying electronic versions of share certificates is easier than physical securities.

 An investor can manage his securities just by using a computer or a smartphone.

Dematerialisation reduces the cost of holding share certificates.

The holding charges of shares are nominal. A shareholder can buy even a single share certificate or odd lots as per his choice and capacity. The transaction time for buying and selling electronic certificates is much less than the physical shares.

Electronic dealings in share certificates eliminate the risk of fraud, theft, damage, etc.

The electronic version of share certificates is more liquid than the physical form. The shareholder can readily get a loan against the electronic securities.

Conclusion

Dematerialisation of securities is essential for keeping the securities safe from unwanted nuisances like fraud and theft. It speeds up the transaction of shares between parties and reduces the costs involved.