InvestorQ : Why is my broker insisting that I have a demat account for my IPO application. Do I also require trading account for IPOs?
Anu Biswas made post

Why is my broker insisting that I have a demat account for my IPO application. Do I also require trading account for IPOs?

Answer
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Priyanka N answered.
2 years ago


Your broker is absolutely right. If you don’t have a demat account then where do you get credit for your IPO shares. Say you applied for 500 shares of the IPO and you have been allotted 300 shares. Now there is no physical printing of shares certificates so you can get IPO allotment in physical form. The only way out for you is to get delivery in demat form. That means you need to have a demat account. If you have a demat account then you can directly get the IPO allotment in demat form as credit in your demat account? So, demat account is a must?
Trading account is not compulsory to invest in IPO. But the trading account is required to sell the shares you get in IPO. For example, if you got the shares of an IPO at Rs.220 and the shares listed at Rs.380, then you will think that you really lost a wonderful chance to make profits. The share has listed at a super premium but you cannot sell because you do not have a trading account. That is not good because you are missing out on a golden opportunity. That is why you must also have a demat account opened along with trading account. Ensure that your trading account is activated so that when IPO lists, if you can make some money, then you can take the profits on listing itself.