How to Transfer Demat Account from One Broker to Another

A Demat account holds all kinds of securities in electronic format. The advent of Demat accounts revolutionised the world of investing. It is also known as Dematerialised account. Investors can hold stocks, bonds, mutual funds, etc., in a Demat account. In India, investors can open multiple Demat accounts. Investors can also transfer their Demat account from one broker to another. Let's today learn how to transfer a Demat account from one broker to another. 

Why Would Someone Want to Transfer Their Demat Account From One Broker to Another?

There are many instances when an investor may want to go for a transfer of a Demat account. The following are some of the major reasons. 

1. Reduction in brokerage charges: An investor may wish to reduce the brokerage fees. So, he may opt for a broker who charges less fees and commissions. Some investors may consider opening a Demat account with a discount broker. Additionally, they can make use of a brokerage calculator to evaluate the potential cost savings associated with their trading activities.
2. Better services: Investors may like to change their current broker to avail better services. These may include an excellent trading platform, access to advanced trading tools etc.
3. Securities management: Some investors prefer to categorise shares on the basis of their financial goals like retirement planning. Separating the assets based on their taxation may be another reason. 
4. Consolidation of holdings:  One can consolidate all his assets in multiple Demat accounts with various stockbrokers in one account. This approach can help investors to lower the Demat account charges.

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Who Are the Participants While Transferring Demat from One Broker to Another?

The participants are involved while transferring a Demat account from one broker to another

1. Investor   
2. Current Broker  
3. New Broker  
4. Depository, i.e., National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL)

How to Transfer a Demat Account from One Broker to the Other

Let’s now find out how to transfer the Demat account from one broker to another. The transfer of the Demat account involves the following steps.

Step 1: An individual must fill out the Delivery Instruction Slip (DIS) and submit it to the existing broker.

Step 2: The broker sends the DIS form to the depository.

Step 3: The shares will be transferred to the Demat account by the Depository.

Step 4: The investor's new Demat account will reflect all the shares when the transfer process is complete.

Different Types of Demat Account Transfers

There are two methods for the transfer of Demat accounts. The first is online, and the second is an offline or manual method. Let’s look at each of them.

Online Demat account transfer

Investors can transfer their Demat accounts online.

Here are the steps to follow.

1. First, visit the CDSL website and select the 'Register Online' option to register.
2. Fill out the form with the necessary details.
3. From the drop-down menu, choose the option to print the form.
4. The Depository Participant shall receive a transfer request of the Demat Account.
5. An email password will be sent to your registered email address once the depository participant completes the verification process.
6. Enter this password to log in. After that, you can transfer all your shares.

Offline Demat Account Transfer

If your new and current brokers are affiliated with two different depositories, you will have to transfer the Demat account manually. The trader is required to submit this data on the DIS (Debit Instruction Slip).

A delivery instruction slip, or DIS, is given to an investor along with the welcome kit when they open a Demat account with a stockbroker. The investor must complete the form while applying offline. Ensure to fill in the following details.

1. Target Client ID: The investor is assigned a 16-digit identification number. It is called the Beneficiary Owner ID (BO ID), which is the broker's ID.
2. ISIN: The International Securities Identification Number or ISIN is a 12-digit number. It helps identify securities such as funds, bonds, stocks, and shares, among others. You must mention it in the slip.
3. DP Name: Mention the name of the Depository Participant or the broker.
4. Inter Depository: Fill in this field if you want to transfer a Demat account from one depository to another.
5. Off-Market: Select this for transferring your Demat account to a broker with the same depository.
6. Target Client ID: Finally, mention the Target Client ID to which you want to transfer your Demat account.

Once you have mentioned all these details, follow the steps listed below. 

1. Note the 12-digit ISIN number that helps in identifying securities like stocks, bonds, and equity.
2. Since the ISIN will be used to complete the transaction, make sure it is accurate.
3. Select the right transfer option, such as an inter-depository transfer or an off-market transfer.
4. Verify that you have selected the right choice.
5. Submit the completed DIS to your existing broker.
6. Take the acknowledgement receipt of the DIS form from your broker.

In a few days, your Demat account will be transferred from your existing broker to the new one.

Factors to Consider When Choosing a New Broker

You should thoroughly consider the following things while choosing a new broker.

1. Investment Objectives: You should always choose your broker depending on your goals, risk tolerance, and investment capacity. For example, you may choose a broker with low annual maintenance charges (AMC) if you want to make long-term investments. Similarly, you can go with a broker with low transaction charges for day trading or short-term investments.
2. Brokerage fees: Low brokerage costs are crucial for those who want to make regular investments. Less fees can also be a sign of a brokerage's volume of business. Remember, high brokerage charges can reduce your profits significantly. 
3. Examine the track record: Another crucial factor is the broker's performance. Properly check the track record and reputation of a broker. Also, check if the firm offers fair pricing and transparent terms and conditions. Find out about the broker by consulting other investors. To find a broker's popularity, you may also look for a list of brokers and their market share.
4. Additional services: When choosing a broker, be sure to look at the services they provide. Services like investment tutorials or timely information about new regulations are quite beneficial. This is very helpful if you're new to investing and want to stay updated on developments in the world of trading.

Things to Remember While Transferring a Demat account

You should note the following things while transferring your Demat account.

1. The existing broker may charge a fee for transferring the Demat account. The fees usually vary from one broker to another.
2. There are no charges if the investor wants to close the Demat account with the current broker.
3. The investor must give the broker back the unused DIS if he closes the Demat Account.

Conclusion 
The facility to transfer a Demat account from one broker to another offers flexibility in making strategic decisions in the financial journey. One can transfer his Demat account to a new broker through online or offline methods. For offline transfer, investors need to fill out the DIS slip and submit it to the existing broker. For online transfers, they can visit the CDSL website and fill out the form to place their request. Transferring your Demat account can be beneficial in many ways. However, always look for a good broker. Consider the brokerage charges, reputation and services offered. It’s vital to select a trustworthy broker who can fulfil your requirements.