How to Open a Trading Account
India has been moving towards a cashless economy. It is faster, secure and more cost-efficient. The origin of the digital revolution of finance lies in the capital markets. The stock markets shifted to electronic mode of trading (dematerialisation) in 1996 ever since the introduction of the Depositories Act 1996.
Before the conversion, the stock markets operated on an open outcry system. Traders communicated verbally and through gestures to buy and sell shares. With the advent of electronic trading, a simple online command is enough to execute a trade. However, electronic trading has prerequisites like having a demat account, trading account and bank account to access the capital markets.
What is a Trading Account?
Similar to a bank account, a Demat account is used to store the different kinds of securities bought by the investor. Meanwhile, a trading account is required to hold or buy new securities. It is essentially an interface between the Demat account and the investor. It is not possible to buy or sell a unit of security without a trading account.
You just have to place the order through the trading account and the request to buy/sell is forwarded to the stock exchanges. Once completed, the securities are deposited in the demat account and the required amount is deducted from the bank account.
Features of Trading Account
A trading account is not limited to stocks, there are trading accounts for currencies, commodities, bonds, gold and exchange-traded funds. The biggest benefit is that you can open trading accounts online and not visit a bank or the office of the broker since trading accounts provide one-point access unlike physical trading.
Through a single trading account, you can access stock exchanges like BSE and NSE, commodity exchanges like Multi-Commodity Exchange and National Commodity and Derivatives Exchange. Opening trading accounts online gives you flexibility to trade through multiple mediums and trade through mobile, desktop or through a call.
Step-by-Step Guide on How to Open a Trading Account
Opening a trading account online opens up a host of investing possibilities. You can open a trading account in a few simple steps:
- In the first step, choose a brokerage firm to open a trading account after conducting a thorough research. Take the various charges levied by brokerages, the interface of the trading platform and the value-added services into account before finalising a brokerage.
- After selecting a broker, enquire about the trading account opening procedure. The brokerage will require you to fill up an account opening form and a Know Your Customer (KYC) form. A representative from the brokerage firm will assist you with the process. Most brokerages offer a Demat-cum-trading account as a Demat account is mandatory to store the securities.
- You will also have to submit identity proof, residence proof and in some cases proof of income. A photocopy of the Aadhar card or passport, besides several other documents, can be used as proof of residence and a copy of an Aadhar card or PAN card can be used as identity proof. The PAN card is compulsory to open a trading account.
- Post submission of the documents, the brokerage will conduct a manual KYC verification. A representative may visit your house to verify the documents or an online verification will be conducted. If you do not want to manually verify the documents, you can opt for the e-KYC process. For the e-KYC process, your PAN card should be linked to the Aadhar card and your bank account. The mobile number submitted in the account opening form should be the same as the Aadhar card for the e-KYC process.
- It generally takes 3-4 days to activate the trading account after the completion of the verification process.
IIFL Trading Platforms & Technologies
IIFL has various trading platforms for different types of investors. Some investors need different types of charts and financial data, while some investors need research reports. Depending on these characteristics, IIFL offers various next-generation platforms.
IIFL Markets:One of the simplest trading apps available in the country has also been awarded on multiple occasions. It provides a simple interface with live prices, a customisable watchlist and an advanced dashboard.
TT Iris:It has been developed in collaboration with Spider Software and helps you track important market movements and conduct real-time analysis. The TT Iris platform provides advanced charting and technical analysis tools.
IIFL MF App:You can invest in mutual funds and track MF investments through the IIFL MF App. The app has a paperless registration process and you can also receive suggestions through the platform.
Along with the IIFL Markets, IIFL MF and TT Iris, IIFL has also developed the TT Web and the TTExe platforms.
Trading Account Charges
IIFL Securities has three equity brokerage plans catering to different types of investors.
Variable Brokerage Plan:This plan depends on the monthly volume of the investor where investors with higher volumes get lower brokerage rates. In the delivery cash segment, the brokerage for a monthly turnover of less than Rs 1 lakh is 0.60%, while for a turnover of over Rs 2 crores, the brokerage is 0.15%. There are various turnover slabs between Rs 1 lakh and Rs 200 lakh.
Flat brokerage charge:Here the brokerage is charged at a flat rate, irrespective of the monthly turnover For delivery trades it is 0.50% of the transaction and for intraday trades is 0.05% on both buy and sell transactions.
Value-added subscription plan:It has been designed for frequent traders and there are 7 different subscription plans under this model. Lower brokerage charges can be availed for a specified period. For instance, under the Rs 5000 plan or V5000VAS, the brokerage for delivery trades reduces to 0.35% as against 0.50% in the default plan.
Benefits of India Infoline Trading Account
IIFL Securities is one of the oldest and the most credible names in the market. Opening a trading account with IIFL Securities can provide you a host of benefits.