Over the last couple of years, investing in the stock market has become enormously popular. To begin with, investing, one must know what is demat account, as they require one to begin their stock trading journey. Hence, investors new to the stock market start their trading journey with a reliable stockbroker or online platform.
What is a Demat account?
A dematerialisation account is an account that holds all your purchased equities, mutual funds, ETFs, bonds, etc. In the era of online trading, various brokers provide unique interfaces with features that make it easier for the customer to navigate, study, and understand market trends. For these services, the brokers levy a fee in the form of brokerage or transaction cost, which differs from broker to broker.
Reasons for the transfer
While it is uncommon for users to transfer shares from one portal to another, it is not unheard of. Often, users find an economical option or a better service provider, so they prefer to switch. Here are two primary reasons for the transfer:
- Opting for a new broker for the following reasons:
1. Better online trading facilities
2. Less Brokerage fees
3. Enhanced value-added services like charts and analysis reports.
4. Better security
- Holding multiple demat accounts
1. When a person holds multiple demat accounts and wants to merge them, it becomes necessary for him to transfer shares.
2. Sometimes, investors have only one account but want to differentiate between their investment portfolio and trading activities. This requires them to open another demat account and transfer either category to the new account.
How do you transfer?
It is essential to know that the transferred shares are held with depository systems, NDSL and CDSL. There are two ways to transfer shares, online and offline. The manual or the offline mode is more popular. However, the online mode is now gaining popularity. The process for both methods varies slightly.
The transfer mode depends on the depository with which the broker is associated. If your current and new broker are both associated with the same depository, then there will be an intra-depository transfer of shares. However, if the current and new brokers are registered with different depositories, then there will be an inter-depository transfer of the shares.
For an intra-depository transfer, you must follow these steps:
Step 1 – Record the names and ISIN numbers of the shares to be transferred. It is imperative to enter the correct ISIN, as the transactions will be processed based on it.
Step 2 – Record the target client ID, a 16-character code, including the client’s and the DP’s ID.
Step 3 – Select the mode of transfer. Now you have to choose whether you want an off-market or inter-depository transfer. This is a very crucial step, so choose carefully.
Step 4 – Fill in and sign your Delivery Instruction Slip (DIS), then submit it to your current broker. Collect an acknowledgement receipt in return for the DIS from the broker.
Voila! Within the next 3-5 working days, your transfer of shares will proceed.
Online transfer of shares
An online transfer can quickly be done using CDSL. As an account holder, you must visit the CDSL website, register yourselves, and submit a form to the DP. Once the DP completes the verification process, you can make the transfers. Follow the steps for an easy transfer:
Step 1 – Go to the CDSL website and register yourself. Then select the option that reads EASIEST on the menu, which means Electronic Access to Securities Information and Execution of Secured Transaction.
Step 2 – Now fill the form with the required details, such as DP id, your id, phone number, and email address. After verifying your details, within 24-48 hours, you can transfer your shares.
Transfer of shares from one demat account to another is not very difficult. However, remember to research your new stockbroker before taking the plunge. A good stockbroker, like Klevertrade, can make a huge difference in your online trading experience.