In order to buy or sell share in equity market, you need to open a trading or Demat account. Buying shares of a company gives the buyer certain rights such as the right to earn dividends and also part-ownership of the company.
A Demat account will hold the stocks or shares in your name and the same will reflect in your stock portfolio as you can't hold or store shares in physical form. A Demat or trading account is like an intermediary who facilitates the buying and selling of stocks. The demat account is linked to the investor's bank savings accounts to ensure smooth transfer of funds.
You can open your trading or demat account through brokerage firms. A broker can be an individual or company or even an online agency, registered and licensed by Securities and Exchanges Board of India (SEBI), who regulates the share markets. Demat and trading accounts are provided in India by the two depositories, NSDL and CDSL, through brokerage firms. Every broker charges certain commission and fees for processing investor's order. These charges can vary from broker to broker. Some brokerages offer flat rates.
The brokers can be of two types a) full service brokers b) discount brokers. - Full-service and Discount. A full-service broker provides a variety of services along with buying and selling of shares such as research and advice as well as retirement and tax planning.
For example, if you open your trading account with a bank subsidiary, it can be your a 3-in-1 account, i.e., a savings bank account, a demat account and an online trading facility. Other full-service brokers provide all these facilities except a savings account.
Discount brokers are new to India. They charge a much lower fee than full-service brokers and provide a no-frill stock brokerage accounts. They provide the necessary trading facility at the least possible cost.