Everything About Demat Account Fees And Charges
Demat Account helps store the shares in digital mode. It has changed the trading world considerably. Demat and trading accounts have eliminated the rough and long route to buy and sell shares. It makes the investing, holding, trading, and monitoring of stocks convenient, cost-efficient, and faster through an integrated platform.
No more stamps, no visit to the company’s registrar, and no worry about damage to physical certificates of share. All because of the Demat Account that facilitates online stock trading. You simply need to instruct your broker/depository participant (DP) from the comfort of your home.
After knowing the Demat Account meaning and its usefulness, it is necessary to be informative about Demat account charges.
Investors or traders need to open a Demat account with a brokerage firm or bank registered as Depository Participant (DP). The Demat account is a pre-requisite for share trading. Most brokerage firms offer a choice to open free Demat account. However, there are certain charges applicable to Demat accounts that you should be aware of.
Demat Account Charges
1. Account Opening Charges
Demat account opening charges are nil or nominal. Brokers and banks offer zero account opening charges. But there may be maintenance charges, GST or other statutory fees.
2. Custodian Charges
Brokers and banks charge a custodian fee for holding your securities safe. It is usually charged monthly or annually, specific to the service provider. The charges depend on the number of securities you hold in a Demat account. The charges normally lie between Rs. 0.5 – Re. 1 for each International Securities Identification Number (ISIN). This is levied for the debits to your Demat accounts only, no charge is levied on credits.
3. Annual Maintenance Charges (AMC)
You are going to use an integrated platform that is to be maintained efficiently by DPs. Brokers charge the fee annually for the services rendered. This is an annual fee to be paid every year. Some DPs may charge quarterly fees or a lifetime fee. Many brokers do not charge AMC for the first year of account opening and for a basic Demat account having a balance less than Rs. 50,000. For a balance above Rs.50,000 and less than Rs.2,00,000, the fee will be between Rs.100 – Rs. 750.
4. Transaction charges
The charges are based on the number of transactions you are making through brokerage accounts and depend on the kind of transaction too. Some DPs charge a flat rate on the monthly basis and some charge as per the number of transactions.
The fee may be between Rs 1.5 – Rs. 10 for each share you trade. Depending on the rules of DPs, it may be charged for just buying shares or for both buying and selling of shares.
5. Demat & Remat Charges
Brokers charge for dematerialization as well as the dematerialization of physical shares. Demateriation cost will be around Rs.5 per certificate and rematerialization may cost you around Rs. 25 per certificate.
6. Off-Market Charges
There are charges involved for transferring the shares from one demat account to another. This may be required if you switch from one Depository Participant to the other. Or, if you want to gift shares to a family member, or may want to consolidate shares in one demat account that may be spread across multiple demat accounts.
The Bottom Line
The brokerage cost includes all the above-defined costs. Investors need to take special care of such fees because the trading will be more profitable with a cost-efficient depository participant. Read the schedule of Demat Account charges of a brokerage firm and select the right broker.