| In order to begin trading in
commodities in India, you will first need to have your own commodity trading account.
If you have been doing any research into this matter, you will no doubt
discovered that there are literally thousands of companies offering commodity
trading services in India. Any one of
these should be able to open a commodity trading account on your behalf. Many will also offer to open a demat account
for you at the same time. The fees for
this service will vary depending on which commodity trading broker in India you
choose to deal with. Some will offer the
account openings completely free of charge.
WHAT IS THE DIFFERENCE BETWEEN A COMMODITY TRADING ACCOUNT AND A
DEMAT ACCOUNT?
A demat account is where electronic records of any shares in companies
that belong to you are held. These are
called equities. The demat account acts
like a digital locker for keeping these safe and secure without the need for
physical paperwork. If you already have
a demat account, you can theoretically
configure it in such a way that you can begin trading in commodities and
equities in that very same account.
However, if you never intend to trade in equities, you do not strictly
need to have a demat account, as a simple trading account will be adequate for
that.
HOW TO OPEN A COMMODITY TRADING
ACCOUNT IN INDIA?
Once you have selected which commodity trading company in India you wish
to use as your broker, you can ask them to set up a commodity trading account
for you. Choosing the correct broker for
yourself will depend on many factors, not least their charges and fees. While some may charge a fee for opening an
account but then proceed to charge you a maintenance fee each month, others
will charge for opening the account but not charge a maintenance fee. Others still may charge both, or neither of
these fees. Some may simply charge on a
‘per trade’ basis, meaning that if you do don’t make any trades, you do not pay
anything. However this may not be a good
thing if you are planning on making a lot of trades. Speak to the brokers about available price
plans and agree on what suits you the best.
Nowadays most traders have an online
form that you can fill out from the comfort of your chair without having to
visit the branch in person. After the
submitted form is received by the broker, the regulators mandate that he must
use the information provided in the form to assess the potential trader in
regards to his personal experience, appetite for risk, and current financial
position. The broker should be satisfied
that the applicant will be able to survive financially even if he loses all
that he invests. Some documents will also
need to be seen by the broker.
WHAT DOCUMENTS ARE REQUIRED TO OPEN A
TRADING ACCOUNT IN INDIA?
Before the account can be opened, your identity must be verified by the
submission of several documents. These
could be provided in person at the branch where the broker can take Xerox
copies. Alternatively, some brokers
allow scans of the documents to be uploaded via their website or attached to an
email. Failing that, you may produce
Xerox copies yourself and post them to the branch.
The documents required will comprise of one photo ID proof (this should be your
PAN card, as a PAN card is a prerequisite for anyone wishing to open a trading
account), and one address proof (for this you could use anElectricity bill,Voter
Id Card,Ration Card,Flat Maintenance bill, Telephone bill,Bank Passbook, Registered
Lease or Sale Agreement for Residence, Bank statement not more than 3 months
old, Driving License, Insurance copy or a Passport). The names, addresses and date of birth if
shown on any of the documents must exactly match the details entered into the
application form.
As you can see from the above information, you should not be daunted about
opening a trading account in India, as the process is really very simple. |
