Worried about safety of your demat account? Here are 10 key practices to follow to keep it safe

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demat accounts. In light of these incidents, it becomes imperative to assess the security of one's demat account by understanding its structure and recent developments in trading practices. This scrutiny is essential for investors to ensure the integrity and safety of their investments in the dynamic landscape of India's financial markets.

Certainly. Investors have the option to open demat accounts with depository participants (DP), who are affiliated with either of the two main depositories: National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL), both endorsed by NSE and BSE respectively. These depositories are backed by reputable organisations, including various Public Sector Undertakings (PSUs) and leading companies, instilling confidence in the safety of the demat securities they administer.

Regulated by the Securities Exchange Board of India (SEBI), the securities held within these depositories are subject to stringent regulations, minimising the risk of fraud. SEBI's guidelines have standardised Power of Attorney (PoA) norms, mandating limited-purpose PoAs that restrict a broker's authority to only facilitating the transfer of securities and funds for settlement purposes. While PoA is not obligatory, its utilisation streamlines transactions.

Under the revised regulations, brokers cannot execute transactions or transfer securities for off-market trades without explicit written consent from the client. Moreover, with transactions and settlements conducted electronically, there exists a traceable trail for regulatory authorities to monitor. This enhanced transparency makes it easier for authorities to detect any fraudulent activities perpetrated by brokers.