Summary of Demat Account, Equity Market and Equity Trading

What is Equity?

Equity is financial instrument by which company invites the public to invest their money

in the company and investor can become a partner of the company. Generally, when the

company have insufficient money to expand its business it comes with equity shares.

What is Equity Market?

The market in which shares are issued and traded, either through exchanges or over-

the-counter markets. Also known as the stock market, it is one of the most vital area

of a market economy because it gives companies access to capital and investors a

slice of ownership in a company with the potential to realize gains based on its future

performance.

This market can be split into two main sectors: the primary and secondary market

The primary market is where new issues are first offered. Any subsequent trading takes

place in the secondary market.

What is Equity Trading?

Equity trading is the buying and selling of company stock shares. Shares in large

publicly-traded companies are bought and sold through one of the major stock

exchanges, which serve as auctions managed for trades. Stock shares in smaller public

companies are bought and sold in over-the-counter market.

Equity trading can be performed by the owner of the shares, or by an agent authorized

to buy and sell on behalf of the share's owner. Proprietary trading or principal trading

is buying and selling for the trader's own profit or loss. In this case, the principal is the

owner of the shares. Agency trading is buying and selling by an agent, usually a stock

broker, on behalf of a client. Agents are paid a commission for performing the trade.

What is Demat account?

Demat refers to a dematerialised account.

Though the company is under obligation to offer the securities in both physical and

demat mode, you have the choice to receive the securities in either mode.

If you wish to have securities in demat mode, you need to indicate the name of the

depository and also of the depository participant with whom you have depository account

in your application.

It is, however desirable that you hold securities in demat form as physical securities

carry the risk of being fake, forged or stolen.