How Can We Protect Our Demat And Trading Accounts?

A Demat account and trading account allow you to participate in online trading conveniently. Though these accounts are encrypted and secure, the large number of Demat account frauds that have taken place recently has cautioned the users. Hackers use advanced software, viruses, and malware to steal your financial information. 

If a trading account gets hacked, the fraudsters try to login into the account and steal the financial securities and assets. In November 2021, a US trading platform called Robinhood was subjected to a data breach in which the names and email addresses of millions of users were hacked. In this case, the hacker infiltrated customer support systems by social engineering the support executive over a call. Thankfully, the customers didn’t suffer any financial loss as the debit card numbers, bank account numbers, and other sensitive details were not revealed. Such incidents tell us why we should never share our financial and personal details with anyone. 

How to safeguard your trading account?

trading account

Follow these tips to ensure the security of your trading account:

Read the contract carefully 

When it comes to trading, it is recommended that you know all your rights before entering into a contract with a broker. It is better to reach the broker contracts carefully to avoid any issues later. 

Having transparency when it comes to Demat account charges is also essential to keep your interests protected. Many brokers provide a free Demat account these days but they might not specify all the charges in the contract. 

It is difficult to hack a password that is strong. Therefore, ensure that your trading account password is strong by using a combination of alphanumeric characters and special characters. 

These days, stockbrokers employ a two-step verification while logging in to the trading account and selling the securities. In this system, you get an OTP on your registered email address or mobile number that needs to be entered to complete the action. These methods ensure that no one else gets access to your trading account. 

Prefer online transfers 

It is possible to transfer the securities online with the help of CDSL’s Easiest or NSDL’s Speed-e-services. It is safer to transfer the securities online instead of authorizing the broker to transfer it on your behalf. 

Use secured connections 

Install a firewall or antivirus on your system to safeguard your details from viruses, spyware, and malware. Also, refrain from using public computers and WIFI connections as they are handled by several users. 

Avail of the account freezing option 

It is possible to freeze your trading account when you are not in the mood to trade for a certain period. A Demat account can also be frozen to restrict debit transactions. However, you will still receive the dividends, bonuses, stock splits, and other corporate benefits as before. You can unfreeze your Demat and trading accounts whenever you want by contacting your broker. 

Monitor your trading activities closely 

It is possible to keep a record of each and every transaction by downloading a detailed account statement. It will allow you to find out if there are any discrepancies in the credit or debit of securities. Also, it allows you to verify whether all the transactions have been carried out on your end. 

Don’t link your primary bank account 

For a seamless transfer of funds, it is essential to link your trading account with a savings account. Use a separate bank account for trading purposes as it will help you to monitor the transactions closely. Don’t link your primary account to the trading account that has excessive funds. Instead, use a secondary account that has limited funds. 

Keep your contact details updated 

An updated email address and email id will provide you access to all the important messages from the depositories. This will enable you to track your trades properly. 

Don’t leave a signed DIS booklet with the broker 

Many investors have the habit of signing their DIS booklet in advance. Avoid this habit and even if you have a signed DIS booklet, never leave it with the broker or anywhere else as it will act as an open invitation to fraudsters. 

Don’t leave securities idle 

Transfer all your securities from the broker pool account into your Demat account, especially if you have given POA (Power of Attorney) to the broker. It is because there have been cases where the brokers have misused the POA to transfer the securities into their pool. Also, when you assign the POA to the broker, limit their rights and read the POA agreement carefully. 

Also Read: How To Use Digital Signature How it Works