In order to invest in equity shares, an investor needs to open three accounts namely:
A) Bank account.
B) Trading account or broking account with a SEBI registered stock broker of a recognized Stock Exchange. This account is used to buy and sell securities on the Stock Exchanges. To open a trading account, you have to fill ACCOUNT OPENING FORM and submit the signed Know Your Client (KYC) documents.
Take the following precautions while filling up the account opening form:
- You should put your signatures while indicating preferences for trading in different exchanges.
- You should carefully note all the charges/ fees/ brokerage that are applicable on your accounts and keep a record of the same.
- Identify the segments in which you would like to trade (cash, F&O, Currency Derivative or any other segments). Trading in derivatives requires understanding of the derivative products.
- In case you want to avail additional facilities namely Running Account facility, execution of Power of Attorney, etc., you will have to give specific authorization to the stock broker in order to avoid any dispute in the future.
- You should provide your email address and mobile number in the account opening form. The broker and stock exchanges use these contact details to keep you updated on the trading updates that are important for you to know.
- You should always demand and take a copy of the account opening form for your records.