There are a variety of reasons why users decide to switch stock brokers. Traders may desire to switch brokers if they realize that another broker offers reduced brokerage fees and higher service standards. Alternatively, your current broker may have a shaky mobile trading platform, and you're seeking for a far better trading experience. It's also possible that you'll be forced to switch brokers as a result of regulatory issues with your current broker.
It is fairly simple to move your trading account from one broker to another in the United States. In the Indian setting, though, things are a lot more complicated. For example, you can move your demat account from one DP to another, but you can't move your open F&O positions from one broker to another. In such circumstances, you'll need to close down positions with one broker before moving on to the next. Here's how to deal with the broker shift in various situations.
This is a rather straightforward task. The procedure is simple if you already have the demat credits for all of the shares you've purchased. If the existing DP and the new DP are both managed by the same depository, you can transfer shares to the new DP after registering online.
If your present DP is with CDSL and your new DP is with NSDL, for example, you must submit a debit instruction slip to your current DP to transfer your current shareholdings to the new DP. The off-market transfer can take up to two days, after which you can apply to shut your existing demat account. If there are any outstanding demat charges, you must pay them before the shares are transferred and the demat account is closed.
After you've terminated your demat account, you can apply to close your trading account as well. Take a photocopy and acquire a stamped acknowledgement from your DP when you submit the account closure application for your records.
This isn't so much of a problem with cash equities, but it's a challenge with futures and options. The open futures and options positions in your trading account in this circumstance cannot be transferred to another broker. Before the account may be canceled, you must close these positions to zero. A better option is to close your account and start over with a new monthly F&O contract with a new online stock broker.
Your trading account, on the other hand, may have a credit or debit balance. If your account has a debit balance, the broker can hold your payouts and delay terminating your account until the debit is resolved. The broker is responsible for closing the trading account once the debit is cleared. It's advisable not to leave an active trading account with any broker unused because it could be abused.
It's critical to get confirmation from the broker about your debits and credits, as well as a copy of the ledger statement. Also, make a duplicate of your application for trading account closure and obtain a stamped acknowledgement from the broker.
This is usually the time when investors and traders have the most difficulty. You may have purchased shares but not received credit in your online demat account. You may have sold stock but not received bank credit. Your trade winnings, on the other hand, may have been held back. The first step is to examine your ledger for any debits and, if they are acceptable, authorize the broker to adjust them against your payouts.
Send a letter to your broker as soon as possible, asking them to transfer all pending stocks to your free demat account and any credit amount to your bank account. The broker will usually carry out your instructions within a week, after which you can close the account. What should you do if the broker still refuses to follow your instructions?
In the case of delivery delays, escalate the problem to the DP, and in the case of delayed payouts, to the stock exchange. If you are still unable to find a solution, you may write to SEBI, with a copy to the broker's CEO and Compliance Officer. That is usually effective!