When trading online, traders and investors need to store their shares securely in a Demat account with a reputed broker. You can hold your shares and other financial securities in a Demat account, including government bonds, mutual funds, ETFs, etc.
Now, that the Demat account offers speed and convenience, it is not far away from fraud. To protect the investors from fraud associated with online Demat accounts, SEBI has some strict regulations and protocols that brokerage firms have to follow. While the number of fraudulent incidents has spiked in the past decade, it is primarily due to negligence and lack of knowledge from the user’s end to protect themselves.
Brokerage firms and stock market officials are constantly developing innovative and unique ways to prevent fraud. But a single mistake from the account holder’s end can cost them significantly. Here are a few precautionary steps that every Demat account holder must take to protect their account against fraud and ensure their Demat account is safe.
Sure Shot Ways to Ensure your Demat Account is Safe
Here are a few precautions that you can take to ensure maximum safety of your Demat account:
- Be Cautious and Never Forget About Your Demat Account: Many times, people buy shares and conveniently forget about their Demat accounts. This carelessness towards your account puts you in risk and attracts scams. If you do not wish to operate your account for a while due to any reason, always inform your DP and request him to freeze your account. This action ensures that access will be granted only when you request it.
- Do not share your Login Information: Your login information should be kept private and secure at all times. It is always recommended to change your login password frequently.
- Keep a Powerful Password: An ideal password is easy to remember but not easy to guess. It should include special characters and not simple words that can be associated with you quickly. Another critical point is to avoid using public networks or wifis to access your Demat account.
- Keep A Record of Your Account Statements: The DP sends you a contract note for all your equity trades and purchases. You should carefully review them and compare them to your trading activity. Also, make sure the DP has the correct contact details to update you with your fund’s balance, etc.
- Thorough Background check of the Brokerage Firm: The number of traders and investors in the stock market has increased exponentially in the last couple of years. With the rise in investors, there has been a significant rise in the number of brokers. Hence, it is essential to verify the broker’s history, performance, reputation, and credibility before choosing one.
With the rampant growth in the number of people investing in the financial market, there has been a significant rise in the number of frauds and theft too. However, it is always suggested that prevention is better than cure. Hence, by following the above-mentioned steps, you can ensure keeping your Demat account safe and save yourself from becoming a malpractice victim.
With that being said, with tight regulations imposed by SEBI, Demat accounts are generally safe. These are just steps for added security and protection for your hard-earned money. Open an account with Klevertrade and safely navigate through the market.