Dematerialization (DEMAT) is the move from physical certificates to electronic bookkeeping. Actual stock certificates are then removed and retired from circulation in exchange for electronic recording.
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.
With the age of computers and the Depository Trust Company, securities no longer need to be in certificate form. They can be registered and transferred electronically.
Through 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.
The introduction of dematerialization served to eliminate such a paper-oriented process. Furthermore, by adopting electronic bookkeeping, this allowed for accounts to be updated automatically and swiftly.
Dematerialization applies not only to stocks, but also to other forms of investment such as bonds, mutual funds, and government securities. The use of dematerialization and DEMAT accounts is comparable to using a bank and bank accounts to maintain one’s assets rather than personally storing and exchanging paper money each time a transaction is made.
Looking to streamline your securities portfolio? Let us help! Our dematerialization services make it easy to convert your physical securities into electronic form, making them easier to manage. Say goodbye to the hassle of paperwork and hello to a more efficient way of investing.
Contact us today to get started!
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