Interestingly, the word “broker” derives from broceur, which means small trader. Yet some believe that it comes from an Old French brocheor or a “wine retailer”. However, the current role of a broker has evolved: instead of being a trader or retailer, they make sure to connect the buyer and seller.
You may be wondering how to invest in the share market online without a broker. In short, this isn’t possible. This article will explain why.
1. Get a PAN card
If you’re wondering how to trade online without a broker, the answer is that it’s impossible. Brokers are the only way of accessing the market.
To trade online, you’ll first need a Permanent Account Number (PAN) card. To get one, you’ll need to apply through the National Securities Depository Limited (NSDL) website or through UTI Infrastructure Technology and Services Limited (UTIITSL).
It costs about Rs. 100 to make your application, and you’ll also need to provide proof of your name, date of birth, and address.
2. Open a demat account
The next step is to open a dematerialized account (a demat account, for short). Demat accounts hold securities in an electronic format. The securities can be kept there for long periods of time. Demat accounts are mandatory for all online traders in India; they are also quite helpful, as they provide you with a safe e-wallet.
To open a demat account, you first must choose a Depository Participant (DP) that best suits you, whether it’s a bank, broker, or another online investment platform. There are two depositories in India that control the DPs:
- CDSL, which mostly provides trades on the Bombay Stock Exchange;
- NSDL, which mostly handles trades on the National Stock Exchange.
3. Open a trading account
Before you can participate in stock market transactions, you must open a trading account with a SEBI registered broker or sub-broker. Trading accounts allow you to instantly carry out trades, and receive updates on the market.
When you’re looking for a broker to open an account with, be mindful of the following factors.
- Fees. Compare the fees of various brokers. At the very least you will pay commission fees, a minimum balance, and possibly withdrawal fees.
- Trading software. Different brokers use different trading software. Try them out before you’ve chosen a broker so that you can find out which suits you best.
- Assets. Find a broker that offers access to a broad range of assets.
4. Get a Unique Identification Number (UIN)
Finally, get a UIN. This number is your unique identifier as an investor. You cannot make transactions of more than Rs. 1 lakh on the stock market without one.
The UIN was introduced by SEBI in an effort to establish their Market Participants and Investors Integrated Database (MAPIN). This allows them to keep track of all the individuals and entities trading stock on the Indian exchange market.
To get a UIN, get in touch with one of NSDL’s Point of Service (POS) agents.
If you have wondered how to trade shares online without a broker, you should now realize that doing so is impossible. You can only access the stock market through brokers, so they’re a necessary part of trading.