Online share trading refers to the use of internet & software platforms for facilitating trading of shares across stock exchanges. Online trading is not limited to equity trading but also extended in commodity trading & mutual fund investments. With the use of internet across various trading channels, consumers have better insight and understanding on how to make best use of their savings and plan their investments in the best possible manner.
Gone are the days when investors had to trade in physical share certificates, wait for days before ownership of shares was transferred and hamper cash flow due to blocking of cash in physical transactions. Trading process is now investor friendly and quick. Online share trading, online stock trading, online commodity trading and online mutual fund investment are transparent as they are facilitated between multiple agencies such as stock exchanges, commodity exchanges and banks. Regulators such as Reserve Bank of India, Securities & Exchange Board of India have been promoting the use of technology in trading for better regulation.
Online trading in shares, stocks, commodities is done using DEMAT account and a bank account. Both the accounts are linked. Shares, stocks are transferred in virtual format into the DEMAT account of investor.
In India trading in stocks and commodities is done under aegis of RBI, SEBI, respective exchanges like, NSE(National Stock Exchange), BSE (Bombay Stock Exchange), NCDX (National Commodity and Derivative Exchange) etc. With the advent of online trading, transactions between multiple agencies have improved and there is a greater level of transparency in high value transactions. Online technologies help in reducing infusion of black money into the trading system.
Online mutual fund investment is being promoted aggressively by Asset management companies and it makes mutual fund management more dynamic. Fund managers can take strategic investment decisions with greater flexibility and investor in mutual fund can follow their investment with ease. In India IRDA (Insurance Regulatory and Development Agency) also works with other regulators in protecting interests of investors investing into mutual funds.
Investment in commodities require good understanding of action happening at ground level i.e. commodity prices across farms in case of agriculture produce, price movement across states, trading houses etc. With most of the information hosted online and online share trading platforms the investor can now manage investments with higher accuracy.
NRI Pan Card, share trading on line, online commodity trading and online mutual fund investment are the result of prudent administration and integration of technology into a robust trading process.