Trading in the stock market involves more than just paying brokerage fees for each trade. Traders also encounter various additional charges for non-trading activities that can impact their overall profitability. To shed light on these often overlooked charges, this article explores the top seven additional fees that stock and mutual fund traders in India must pay.
By understanding and accounting for these charges, traders can make more informed decisions and accurately calculate their profits and losses. So, let's delve into the world of non-trading charges and gain a comprehensive understanding of their impact on the financial landscape.
Open Trading Account and Start Trading!
Many traders need more cash-margins. However, they may have accumulated many stocks, ETFs (exchange-traded funds), or mutual funds in their holding over time. Even if they don't have adequate cash margin, they can still tap into new trading opportunities by pledging their shares/MFs/ETFs.
At Motilal Oswal (MO), the pledging cost for every pledge request is Rs. 50 + GST.
Suppose you find yourself in possession of physical shares inherited from your parents or family members. However, it's important to note that physical shares cannot be traded on leading stock exchanges like NSE or BSE anymore. In order to trade these shares, a necessary step is to open a demat account if you don't already have one. Once you have a demat account, you can initiate a dematerialization request to convert your physical shares into electronic format.
Converting physical shares to electronic format incurs a nominal charge. The depository charge for each dematerialized certificate is Rs. 15. This fee allows for the transformation of each physical share certificate into an electronic form, making it tradable on the stock exchanges.
By undergoing the dematerialization process, you can seamlessly transition your physical shares into an electronic format, enabling efficient trading and capitalizing on investment opportunities.
Rematerialization, also known as REMAT, refers to the process of converting electronic shares back into physical certificates. While electronic shares are readily tradable, physical shares cannot be traded on stock exchanges. Traders opt for REMAT when they wish to hold physical certificates instead of electronic form, often to avoid incurring DEMAT charges. This practice is commonly followed by individuals who have a small number of shares, typically one or two, in their Demat account.
You have to pay a REMAT charge of either Rs. 15 for every certificate or Rs. 100 units per share (whichever is lower).
Suppose you are holding mutual fund units in physical format (also called Statement of Account). In that case, you can switch to demat (or electronic format) through the destatementisation process. While physical mutual funds are non-tradable, electronic mutual funds are tradable.
To convert your mutual fund units to electronic formats, you have to pay Rs. 15 per Statement of Account (SOA).
The restatementisation process enables you to convert your mutual funds from electronic to physical format (also called Statement of Account or SOA).
To convert your mutual fund units from electronic format to physical format, you have to pay Rs. 15 per SOA.
You will have to pay Rs. 100 fee for every contract in either of the following two cases:
If you are using net banking to transfer funds from your bank account to your trading-account, you'll have to pay Rs. 10 as a pay-in charge. However, IMPS and UPI transactions are free of cost.
When trading in the equities market (trading stocks, mutual funds, and ETFs), you should have a clear understanding of the charges you have to pay. This is because it can affect your profit and loss margin. In addition, it will help you calculate the exact amount of profit or loss you will make in a financial year.