3 Points That Set Demat Account And Trading Account Apart

Digitalisation has undoubtedly been a boon to the financial world. It has made investing and trading more accessible and faster than ever before. You no longer need to be physically present to trade on the stock market. Online trading allows you to trade at any time and from anywhere. All you need is a Demat Account and a Trading Account. 

Many times, both these accounts are used synonymously; however, they each serve a distinct purpose. The article will provide you with a detailed breakdown of the differences between a Demat Account and a Trading Account that you should be aware of.

But, before we look at the differences, let us first understand these accounts individually. 

What is a Demat Account?

Until the late 90s, all shares and securities purchased were stored as physical certificates. However, with the digital switch, the electronic bookkeeping of shares was introduced. A Demat Account stores your shares in an electronic format, thus eliminating the hassle of maintaining and storing their physical copies. It also helps you to transfer your shares effortlessly when the need arises.

What is a Trading Account? 

Just as you can store your shares electronically in your Demat Account, you can also trade in the stock market online. A Trading Account is an electronic interface that allows you to buy and sell your shares online in a few clicks. 

You can open a Trading Account easily by registering yourself with a stockbroker. On registration, you are provided with a Trading ID through which you can make transactions instantly.

What is the difference between Demat and Trading Accounts?

Below mentioned are the key areas that sets a Demat and a Trading Account apart:

Points of difference

Demat Account

Trading Account


A Demat Account is used to store your shares in electronic format. You cannot conduct transactions through this account.

A Trading Account allows you to buy and sell your shares in the stock market.

Nature of the accounts

A Demat Account shows your current share and securities holdings.

A Trading Account tells you about all the transactions that you have carried out in the stock market. 

When trading in the stock market, you need to have both a Demat Account and Trading Account.

Role of the account

A Demat Account is a repository account. It holds all your shares and securities. Having a Demat Account is a prerequisite for receiving shares when dealing in equity or applying for an IPO.

A Trading Account is solely for transaction purposes. You can transfer money from your bank account to your Trading Account and vice-versa.

This account does not store or take delivery of shares. To conduct seamless trading activities, you require a Trading Account.

Is a Demat Account required to open a Trading Account?

If you wish to trade in futures, options, and currency derivatives, having a Trading Account is enough since these trading forms are settled in cash. However, if you want to trade in all forms of equities, including intraday trading, you require a Demat Account as per the Securities and Exchange Board of India (SEBI) regulations.

Read more about intraday trading by clicking here.

The DigiDemat Account by HDFC Bank allows you to open both Demat and Trading Account online and from the comfort of your home. With minimal documentation and a quick process, you can start investing in just a few clicks. 

To open a Demat Account with the HDFC Bank, click here.

*Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks, read all the related documents carefully before investing.