Narach Investment

ETRADE AND THE THREE-IN-ONE ACCOUNT


Most investor seek a certain level of efficiency and safety with regard to their transactions in the stock market while buying and selling stocks for and from their portfolio; and also the suitable crediting and debiting of the monetary amount or value of their transactions to and from their savings bank account, respectively.

To enable the seamless transfer of both money and stock for the purchase and/or sale of such stocks some banks and their subsidiaries in India provide these services and facilities through the three-in-one account. Similar services and facilities may also be available to investors at other locations across the globe.

This three-in-one account comprises of three parts; namely, one savings bank account (with the investor's monetary bank balance), one demat account (with the balances of the stocks and the quantities thereof, the investor maybe holding in his portfolio), and one etrade account (through which the investor may transact, that is buy and sell stocks at the stock exchange through his bank and/or its subsidiary providing this service).

It would be quite in place to briefly explain the process involved in firstly buying a stock and secondly selling a stock through this etrade platform. It maybe noted here that the three above mentioned accounts are linked to one another; and therefore function as one entity or unit.

Utilizing the etrade (three-in-one account) resources to purchase a stock through the stock exchange: Let's say, an investor wants to purchase one of the stocks he may have short listed earlier; and expects that at its current market price he would have a fair margin of safety to have it (the selected stock) in his portfolio. He would then login to his etrade account; and expectedly do the following:

To complete the transaction would take 3 days. During which time the etrade platform would seamlessly transfer out the money from the investor's savings bank account and credit it to the sellers account; and also seamlessly transfer the purchased stock and the quantity thereof into the investor's demat account.

Utilizing the etrade (three-in-one account) resources to sell a stock through the stock exchange: Now let's say, an investor want to sell one of the stocks held in his portfolio (in his demat account); in the expectation that at the current market price the said stock offer no margin of safety to him, as it maybe over-priced. The investor would then login to his etrade account; and expectedly do the following:

To complete this transaction would take 3 days. During which time the etrade platform would seamlessly transfer out the stock and the quantity thereof from the investor's demat account and credit the same to the buyer's demat account. Alongside, there would be a transfer in of the monetary value of the stock sold (less brokerage and taxes) into the investor's savings bank account.

With the etrade platform and the troika of accounts in it; the investor may also have access to the futures and options segment of the stock market and also other financial instruments the bank and/or its subsidiary may decide to provide him from time to time. When we look at it dispassionately, we realize and appreciate that not only does this etrade platform improve the efficiency of the transaction the investor may have in mind from time to time; but, also brings forth a higher level of safety of the transaction itself. Further, it becomes a one point interface for all the investor's stock market and other related transactions. In a sense, the investor's bank and/or its subsidiary also becomes his broker.

The only disadvantage if at all, would probably be the inability on the part of the investor to login to his etrade account; due to a high level of traffic from other investors who maybe be accessing their respective etrade accounts at that point of time. However, the bank and/or its subsidiary providing this service usually has this covered through the call-and-trade section of their customer care department. It would only be fair to mention here that such an occurrence is quite rare.