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With rapid technological advancements in the fintech world, investors and traders need to familiarise themselves with the latest methods of share market trading. The first concept that a market investor needs to know is the concept of dematerialisation of shares. Here is everything one must know about what is dematerialization.
Holding and trading shares and securities in their physical form can pose a risk of forgery, loss of certificates, and delays in the transfer of securities. Dematerialization is the conversion of physical share certificates into an electronic format to overcome the hassles of keeping physical copies of securities. Dematerialization meaning, is associated with an electronic version of physical shares and securities. A depository (National Securities Depository Ltd. and Central Depository Services (India) Ltd.) has the responsibility to store the shares electronically.
The dematerialisation process is as given below:
The dematerialisation process is quick and easy and takes place within a few weeks of placing the dematerialisation request.
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.
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Dematerialisation meaning is the conversion of physical share certificates into an electronic form.
Dematerialisation is the process of conversion of share certificates from physical to electronic form. The shareholder can open a Demat account and place a Request for Dematerialisation with the help of the DP to get his shares converted.
Conversion of the shares held by an investor from physical paper to electronic form is an example of dematerialisation.
The objectives of dematerialisation are to provide greater security to shareholders’ certificates, reduce the transaction cost of securities, and make securities transactions safe, quick, and easy for traders.
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