Saturday, September 1, 2007

Demat Accounts

Why is it that India still clings to a paternalistic mentality of Government knows best? The India Government is still trying to play daddy knows best with our Demat Accounts by limiting the amount to exactly one that an individual can open. SEBI is convinced this will limit fraud and allow more transparency into who is trading in the India marketplace.

However the intelligent are simply renting Demat accounts from the less intelligent and using them to buy more IPO issues or hide stock transactions.

The demat rent process involves getting a broker to find or create a demat account holder by paying them a fixed rent. The investor applies for shares in name of the account holder then the account holder transfers the shares in the name of the investor through an off-market deal. You can't put the genie back in the bottle fellas.

This is true not only with demat accounts but just about everything else in India.

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