Difference between Dematerialisation and Rematerialisation

With technological advancements, the stock trading process has simplified over the years. You can open your Demat and trading accounts without any paperwork or worrying about keeping physical certificates. Let us understand what Dematerialisation and rematerialisation processes are in the stock market.

What is Dematerialisation?

Dematerialisation is a process of converting paper-based securities into electronic or digital format. You can hold financial securities in Dematerialised form in something known as a demat account.

Individuals must submit a Dematerialisation Request Form (DRF) to start the conversion process of paper-based securities into the Dematerialised form. Let us elaborate on the process.

Step 1. Open a Demat Account

The first step is to open your Demat account with a stockbroker.

Step 2. Raise a request for the Dematerialisation of securities

• Connect to your stockbroker to access the Dematerialisation request form (DRF). Fill in the form and submit it duly signed to your broker. Accompany the DRF with the physical share certificate(s) and KYC documents. You need to surrender the physical share certificate. Mention 'Surrendered for Dematerialisation' on each of your physical share certificates.
• Obtain the acknowledgement from the stockbroker.
• The broker will process your request basis the receipt of DRF and surrendered shares. The broker forwards the request to the Registrar and Share Transfer Agent (STA). They will also share the physical certificates to the depository.
• If the DRF is found legitimate, physical share certificates are destroyed, and the same securities will reflect in your Demat account.

What is Rematerialization?

Rematerialization refers to the conversion process of digital securities into physical certificates. Rematerialized securities cannot be traded on stock exchanges operating online.

This process involves the following steps:

• An individual must submit the REMAT Request Form (RRF) to their stockbroker to start the Rematerialization process.
• The broker will then approach the depository and forward the request and form to the Registrar and Transfer (R&T) agents.
• The Registrar will verify the form and confirm the print of physical certificates of securities.

These are the Dematerialization and rematerialization processes to facilitate investors

Other Differences: Dematerialisation vs Rematerialization

Here you can find the difference between Dematerialisation and rematerialisation:

• Security:

  Regarding security, Dematerialisation in the online trading system ensures the security of financial assets. There is a lesser chance of fake or late deliveries, theft, etc.

• Convenience:

  Dematerialisation is an easy and transparent process with a SEBI-registered broker. Rematerialization is a cumbersome process.

• Ease of Trading:

  Dematerialised securities can be easily traded online via your online Demat accounts. Rematerialized securities cannot be traded further.

• Cost of Maintenance:

  There is no cost to maintain Rematerialized securities because the investor takes responsibility for their securities. On the other hand, Dematerialised securities must be held in a Demat account only with the stockbrokers. Therefore, stockbrokers levy an account maintenance charge (AMC) for their services.

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