Demat accounts make investing and trading in the secondary markets seamless and hassle-free. However, for the sake of one’s financial knowledge and prudence, an investor should also know about the demat accounts charges that he pays or is likely to pay.
1. Demat account opening charges
Any individual looking to be a trader or an investor cannot open a demat account without a depository participant or a DP. Typically, these are banks or brokerage firms that offer an option to the aspiring investor or trader to open a demat account with them. In some cases, the DP might ask you to pay an account opening charge which will be a small, minuscule amount. Sometimes, the DP might offer you a year's worth of free service on your demat account and charge you from the next year.
Before opening a demat account, it is always advisable to inquire about the prevailing charges for opening a demat account. Also, one must keep in mind that a zero demat account opening charge does not necessarily mean that one will get the most premium quality services.
2. Demat account maintenance charge
Depending on the volume and nature of one’s transactions as well as the offers made by their DP, one is required to pay a certain amount as demat account maintenance charges on an annual basis. This charge can vary from anywhere between Rs 300 to Rs 800.
In certain cases, annual demat account maintenance charges can be completely waived off. The market regulator SEBI has made provisions for small investors by marking out demat accounts that cater specifically to them. They are known as Basic Service Demat Accounts or BSDA, wherein annual maintenance charges are waived off in case the balance in these accounts is less than Rs 50,000.
3. Transaction fees
Demat charges levied by DPs on transactions often determine the flow of business to their companies. Apart from account opening and maintenance charges, DPs also levy charges on the transaction executed by traders in their demat accounts. These charges vary from DP to DP. Some DPs, for instance, impose a flat fee for transactions carried out in a month while others levy charges based on the volume of transactions.
One sure-shot way of reducing your demat charges is by opening a demat account with a brokerage firm that offers competitive brokerage plans. There are many plans in the market where investors are charged only a nominal flat fee irrespective of the numbers of trades carried out by them. Frequent traders can save a fortune by using opening an account with low trading account charges or 0 charges demat account plans.
The final word
New investors are perpetually in search of the best demat and trading account in the market that can considerably reduce their costs on the commissions and charges front. Reputed and reliable brokerage firms like Motilal Oswal offer competitive trading plans to traders and investors alike. Open a demat account with Motilal Oswal in quick, simple steps to enjoy their quality services.
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