In today’s world where pandemic conditions are dictating most of our moves, people have started to take more of an interest in the stock market. As the Work from home (WFH) concepts are becoming the norm, many are looking to make money as well as keep themselves occupied.
While trading might seem like a lucrative space, investors need to make sure that they are choosing the right Depository Participant (DP). Many factors need to be considered before landing on this right participant.
- Factors which should dictate the choice of DP
For ease of convenience, it is advised that your trading account and DP account be with the same broker. Though there is nothing wrong with keeping them separate, it makes tasks such as issuing your Debit Instruction Slips (DIS) and settling your trading issues much easier. It also assures you that there will be no losses incurred as there won't be a delay in DIS if your broker does not have a DP license.
- Keeping technology in the forefront
Another aspect to consider is the technology used by your DP or trading partner. The software and website being utilised should not only be secure but also easy to use. The platform should offer various trading services via smooth processes. The automation must be up to date and the DP must ensure that it works seamlessly to provide optimum facilities.
- Account charges and their impact
To provide state of the art facilities, a DP will come with many costs. Demat account charges usually tend to add up. Most DP’s have minimum brokerage charges on Demat accounts to stay operational. Many costs that depend on your shareholdings, this is mainly due to the charges paid to NSDL or CDSL. The DP will also ask you to pay for statements of holdings, transactions and at times charge penalties. Other unforeseen Demat account brokerage costs could be due to technical mistakes which result in higher prices for better service.
Apart from calculating costs, one must also ensure that the service standards of the chosen DP are more than adequate. Investors must look at the quality of the auxiliary services they provide such as the length of time taken for processes such as corporate actions being credited to your Demat account on time and efficiency of customer care are to be noted while opening a Demat account. Make sure to check these points with other customers before zeroing on your choice.
- Conducting market research on the DP
Once the service standards check out, and you are satisfied with the brokerage charges on the Demat account it is important to know the reputation of your DP in the market and where it stands with service complaints. A DP which pays attention to details does not have many complaints with SEBI nor any regulatory infractions. Hence, you can be assured that it is going to give you the quality you would require from your account. This can be checked via the NSDL or CDSL website as well. If you see recurring complaints it is best to avoid going ahead with that DP. Make sure to also check social media forums regarding various brokers in. This will help provide a comprehensive window on how good or bad a DP is.
Opening a Demat account should be well thought out and not done in the spur of the moment. As it deals with money and assets, it is important to choose a DP and account which will help in maximum gains and also provide security and other benefits to help in an investors transactions.