Like most things in life, investment is also subject to ever-changing trends. Gone are the days when brokerages only offered the service of trading in stocks. Now, there is an abundance of cleverly designed plans serving various investor interests. Moreover, the migration of investment products to the digital space has opened up a new realm of possibilities.
In a time when so many options are available, it is imperative that investors choose the right plan that will serve them in the long run. However, with innovations taking place at breakneck speed, it is also possible that fresh products or services provided by another brokerage house better suit an investor’s goals. Thankfully, investors can go for brokerage account transfer should such a situation arise.
- Transfer brokerage account Before initiating the process of the transfer of shares from one broker to another, make sure that the new firm you wish to switch to is offering you a good deal. You may look for low brokerage fees, advanced trading platforms, or free lifetime Demat AMC.
- Check for depository registration: One important factor to determine is which depository the brokerage is registered with. There are two central depositories in India – the National Securities Depository (NSDL) and the Central Depository Services (CDSL). If the new brokerage house and the old one belong to the same depository, it is relatively easy to transfer your shares. You can do it online on your own. However, if both firms are with different depositories, you must first fill out delivery instruction slips (DIS) and submit them to your existing broker.
- You cannot transfer your Demat account: Remember that you cannot simply transfer your Demat account from one broker to another. You must open a fresh account with the new firm. Although you are allowed to have multiple Demat accounts by law, it is advised that you close old ones if there is no need for them. By doing so, you can avoid paying AMC and other periodic charges.
- Closing your Demat account: If the old and new brokerages are registered under the same depository, a customer can simply download the account closure request form from their website. You must fill out the form and affix your signature before posting it to the address provided on the form. In case the depositories for each brokerage house are different, you will have to submit the DIS to the existing firm in order to initiate a transfer of your holdings. This transfer can take up to two days, following which you can submit an application to close your account. After the Demat account is closed, remember to apply for closure of your trading account as well, if you so wish. Don't forget to get a photocopy and duly stamped acknowledgement from your broker about the same.
- Checklist to follow before account closure: Before you can open a demat account with a new broker, you must close the existing one. However, there is a checklist of things you must do before you can close your account. Make sure to close all your trading positions in futures and options; sell or transfer your securities from the current Demat account to the new one; and clear all pending dues.
- Trading account credits: Credits pending to your trading account is a common problem that occurs when investors wish to switch brokerages. Shares bought may not have been credited to your Demat account, or you may not have received payment for those sold, or your trading profits may not yet reflect in your account. In such a situation, you must check any debits in your ledger and ask the broker to adjust these against your credits. Then, you should instruct your broker to transfer pending stocks to your Demat account and the balance to your bank account.
Before making the decision to transfer shares between brokers, you must determine if you have a good reason to do so. The process requires handling your securities carefully, so you should make sure you have a checklist of things to consider before you can even make the request.
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