InvestorQ : What is the difference between demat account and trading account
Crowny Pinto made post

What is the difference between demat account and trading account

Mahil Khan answered.
3 years ago
While the trading account and demat account are normally opened simultaneously these days, there is a clear difference between the two accounts. While the trading account is meant to handle transactions, the demat account is meant to hold your securities. The trading account does not indicate any ownership. It is only the demat account that indicates ownership of shares. You trade shares, futures, options and currency derivatives in the trading account. But you cannot hold F&O or currency derivatives in your demat account because they are merely contracts and do not signify ownership.
You must actually understand the process flow to be clear on the difference between a demat account and trading account. When you buy shares, you will execute the buy transaction in your trading account after funding the trading account. On T+2 day, your broker will first get the delivery of shares into their CM account and on the same day, the shares will be transferred into your demat account. By end of the T+2 date, the shares will reflect as credit in your demat account. The reverse operation happens when you sell shares. You execute the sell transaction in your trading account and give the DIS to your broker. By T+1, the shares get debited to your demat account and credited to the broker pool account (CM account). That is how the trading account and the demat account interface. They are closely linked but they are not one and the same.