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How to Add or Change a Nominee in Your Broking Account

Investors are only increasing in terms of stock investing. The surge of new investors that enter the stock market daily is overwhelming. Although this promises excellent investment opportunities and the positive distribution of wealth, investors may not be aware of certain technical aspects of opening accounts and how they should hold securities safely. To be blunt, investors are lax while opening Demat/trading accounts, ignoring certain rules that may benefit them in the future. A case in point is the nomination facility offered when you open a Demat account and a trading account. A nominee for a broking account/trading account is essential if you want your account in the right hands in your absence.

A Nominee for a Broking Account

When you open a Demat account to trade in the stock market, you probably are embroiled in the actions of getting into your trades quickly. Furthermore, you may open an account jointly, but there is another aspect to the opening of accounts, both Demat and trading. In most cases, when you open a Demat account with a depository participant (DP), you will also have to start a linked trading or broking account. Why? Because the process of trading becomes seamless when your accounts are connected, and shares and securities are easily accessible to trade with.

You can open a Demat account and a broking account at any bank or other financial institution like a brokerage. In case your DP is the same for your trading account and your Demat account, then you must fill out a nomination form that assigns a nominee to the account. In the event your Demat account is at a different location than your broking account, you still have to nominate a person to be the nominee for both accounts.

Why You Should Add a Nominee

Today, the world has become an unpredictable place. Individuals do not know what circumstances they may face around the corner. To prepare your investments for future generations to benefit, you have to think of worst-case scenarios. Whatever accounts you may open, or investment products you may have, you must have nominees attached to your name. Even if you subscribe to an upcoming IPO, you may get stock allocated to you. What happens to the shares you own should any unfortunate event befall you? Your shares and other assets may land in the wrong hands. Therefore, a nomination in a broking account/trading account and one in a Demat account is absolutely essential.

Mandatory Regulations

With regard to an official circular by the NSE (National Stock Exchange), it is mandatory for any Demat and trading account started in October 2021 to have a nomination. In a broking account or a Demat account that was opened before the stipulated date, the nomination should be made before 31 March 2023. The official intimation for this to be undertaken by investors was done by the Securities and Exchange Board of India (SEBI) to prevent disputes and other issues. In new accounts, those opened after October 2021, having a nomination in your trading account is the law, without which you will not be permitted to start one. This rule remains in effect for a Demat account as well.

How You Can Add a Nominee or Change a Nominee

You may have opened a Demat and a broking account with a DP and already have a nominee for each of these. However, if you wish to change the name of the nominee that already exists, for whatever reason, how do you do so? In the same way that you can add a nominee.

Nominees in Demat and trading/broking accounts can be added, or amended at any point in time. You can have a nominee for a broking account by following some general steps via most financial portals, banks and brokerages. Although you can download applications for nominations conveniently, you will have to visit your depository participant for other steps in the process. Follow the steps below to go about it:

1.On any financial portal through which you may want to open a broking account or already have an account, you can download a nomination application form.

2. Once you download the form, you can fill in the requisite details (yours and the nominee/nominees).

3. You must sign the form and make any nominee/nominees sign it too.

4. Hand over the physical form to your DP.

5. The nominee/nominees will be added or changed as per the instructions in the form filled by you.

The Role of the Nominee

Simply put, a nominee is any person or persons who the account holder legally mandates to possess the account after their demise. A nominee can be a member of your family or even a friend. Nonetheless, a nominee cannot be an entity such as a HUF or any other body. With a nominee in place, the legal heirs of the account will have to go through a tedious process of gaining access to the account. In online broking accounts, the options to have a nominee were left open, so many investors failed to appoint individuals as nominees. However, since the new rule is in force, any online Demat and trading account needs a nominee. For a broking account, the nomination must be updated at the earliest.

Careful Investment

Securities and assets that are held by you when you open a Demat account should be considered as part of your valuable belongings to pass on to future generations. These are essential sources of wealth, whether you gain stock from subscribing to an upcoming IPO or hold bonds in a Demat account.

Your trading account is equally important as it is linked with your Demat account and needs a nomination to be on record. Through your trading account, in the unfortunate circumstance of your demise, your beneficiaries can gain access to the account and choose to transact with your securities. In this way, life becomes easy for those you leave behind, and especially important if your beneficiaries need to transact with your broking account to raise emergency funds in your absence.