Difference Between Dematerialisation And Rematerialisation English

Difference Between Dematerialisation And Rematerialisation

The main difference between dematerialisation and rematerialisation is that dematerialisation converts physical securities into electronic form, making trading more efficient and secure. Rematerialisation is the reverse, converting electronic securities back into physical certificates, typically for personal preference or specific legal requirements.

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What Is Rematerialisation?

Rematerialisation is a financial process where electronically held securities in a Demat account are converted back into tangible paper certificates. This reversal of dematerialisation caters to investors who prefer or require physical documentation of their investments for personal, legal, or specific transactional reasons.

The process involves submitting a request to the depository participant (DP), who then forwards it to the concerned company’s registrar and transfer agent. The rematerialisation process takes some time to complete, during which the securities are frozen in the investor’s demat account, preventing any trading.

Opting for rematerialisation might be driven by personal preference for physical documents or specific circumstances where physical shares are required. However, it’s less common nowadays due to the convenience, safety, and speed offered by electronic holding and trading of securities. Rematerialisation can also incur additional costs and administrative efforts compared to dematerialised securities.

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What Is Dematerialisation?

Dematerialisation is the process of converting physical securities, such as shares and bonds, into electronic form, which are then held in a demat account. This transformation enhances security and convenience in trading and managing securities, reducing the risks associated with physical certificates like damage or loss.

The process begins with opening a demat account through a depository participant (DP). Investors submit their physical securities along with a dematerialisation request form to the DP, who forwards it to the issuer’s registrar for conversion. Once dematerialised, these securities can be easily traded online.

Dematerialisation has revolutionized securities trading, making it faster, more secure, and more efficient. It eliminates problems of forgery and delays in the transfer of physical certificates, while also reducing paperwork. This system is now a standard in major stock exchanges globally, reflecting the move towards digitization in financial markets.

Distinguish Between Dematerialisation And Rematerialisation

The main difference between dematerialisation and rematerialisation is that dematerialisation converts physical securities into electronic form for ease of trading, while rematerialisation does the reverse, turning electronic holdings back into physical certificates, often for personal or specific legal needs.

AspectDematerialisationRematerialisation
DefinitionConverting physical securities into electronic form.Converting electronic securities back into physical certificates.
PurposeTo facilitate easy and secure online trading and storage of securities.To obtain physical certificates of securities, often for personal or legal reasons.
ProcessSubmit physical certificates with a dematerialisation request to a depository participant.Submit a rematerialisation request to a depository participant to convert electronic securities to physical form.
ResultSecurities are held electronically in a demat account.Physical certificates are issued and delivered to the investor.
TradingFacilitates faster, easier, and more secure trading.Physical certificates can complicate or slow down trading processes.
SuitabilityPreferred for modern, efficient, and digital trading environments.Opted for by those requiring or preferring physical documentation.
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Dematerialisation Vs Rematerialisation –  Quick Summary

  • The main difference is that dematerialisation transforms physical securities into electronic formats for simpler trading, whereas rematerialisation reverts electronic securities to physical forms, typically for personal or particular legal purposes.
  • Rematerialisation is the conversion of electronic securities in a demat account into physical paper certificates. It reverses dematerialisation, serving investors who need or prefer physical copies of their investments for personal, legal, or specific transactional reasons.
  • Dematerialisation converts physical securities like shares and bonds into electronic form, stored in a demat account. This improves security and convenience in trading, mitigating risks linked to physical certificates such as damage or loss.

Difference Between Dematerialisation And Rematerialisation – FAQs

What Is The Difference Between Dematerialisation And Rematerialisation?

The main difference between dematerialisation and rematerialisation is that dematerialisation refers to converting physical securities into electronic form, while rematerialization is the process of converting these electronic records back into physical certificates.

Why is Rematerialisation done?

Rematerialization is done to regain physical possession of securities, offering tangibility and a traditional form of holding, which some investors prefer for ease of handling, personal record-keeping, or sentimental value.

What Are The Charges For Dematerialisation And Rematerialisation?

Charges for dematerialisation and rematerialization vary by depository and broker. Dematerialisation may incur a flat fee or per certificate cost, while rematerialization typically involves higher fees due to processing and physical handling.

How To Sell And Buy Dematerialised Securities?

To sell and buy dematerialised securities, open a trading account with Alice Blue, link it to your demat account, and place orders through the trading platform, and the securities will be electronically transferred accordingly.

Can NRI Open A Demat Account?

Yes, Non-Resident Indians (NRIs) can open a demat account in India. They need to provide valid identity and address proofs and comply with FEMA guidelines, often through a designated bank account.

Is Dematerialisation Compulsory?

Dematerialisation is not compulsory for all investors, but it is mandatory for trading in certain securities on major stock exchanges. It ensures faster, safer transactions and is a norm in modern securities trading.

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