Even although you possibly can speak in confidence to 20 demat accounts with a dealer, only some enable linking a demat account from a unique depository participant (DP) to their buying and selling account. Most don’t allow it as it may be an operational problem for them.
Suppose you might have a demat account out of your financial institution. But you open a buying and selling account with a reduction stockbroker. Most brokers won’t mean you can hyperlink the demat account opened with the financial institution to their buying and selling account.
“It can result in numerous operational challenges, particularly for brokers which have the identical value construction for all their shoppers,” stated Venu Madhav, chief of operations at Zerodha.
Assume a dealer permits a shopper to promote shares on its buying and selling account, which the latter holds in a demat account of one other DP. The shopper might want to settle the commerce inside the stipulated time (T+2) by transferring the shares to the dealer’s pool account. But for some motive, the shopper is unable to switch them in time. In such a case, the shares will go into public sale. The shopper might want to pay the distinction between the promoting and the public sale value.
“According to Sebi’s current rules, the dealer ought to ask shoppers for 20% margin for purchase in addition to promote transactions. If shoppers wish to promote ₹1 lakh value of shares, they should have a ₹20,000 margin for the commerce. Failing this, there’s a penalty, which the dealer can’t get well from the shopper as per rules,” stated Madhav.
The downside is that even when your demat account and buying and selling accounts are from completely different brokers, it’s tough for a stockbroker to know the holdings you might have within the demat account from one other DP.
Some corporations like Samco Securities mean you can hyperlink a unique demat account to its buying and selling account, however these might be handled as secondary. The shopper can’t purchase and promote from these. “In such a case, the shopper might want to switch shares from the secondary demat account to our pool account by giving a supply instruction slip to the opposite DP,” stated Jimeet Modi, founder and CEO, Samco Securities.
Some full-service and boutique brokers that cater to high-net-worth people might enable the sale of securities on their buying and selling platform from a demat account that belongs to a different dealer or DP. But these are stockbrokers which can be prepared to offer custom-made providers at a price.
However, stockbrokers enable shoppers to open a number of demat accounts with them.
“Many open a number of demat accounts with us as a result of they’ve bodily shares and wish to dematerialize them. According to rules, the identify on the bodily shares and the demat must be a precise match. In case of joint holding, the names must be in the identical order,” stated Madhav.
Some additionally open a number of accounts for segregation of securities, as they may very well be shopping for some shares for the long run and a few for brief trades. It permits them to segregate their portfolio. But it additionally means extra costs yearly for every demat account.
Subscribe to Mint Newsletters * Enter a sound electronic mail * Thank you for subscribing to our publication.
Never miss a narrative! Stay related and knowledgeable with Mint.
Download
our App Now!!
