Brokerage charges associated with demat accounts and finding demat account numberby Pankhudi Dave Head Finance Manager
Demat accounts are necessary for investors who wish to conduct trades online. Your depository participant charges a certain fee, for every transaction. This fee depends upon the transaction amount and differs from one DP to another; based on the services offered. Typically, investors believe that discount brokers are the best bet as one can get lowest brokerage charges in India. However, as in investor it is important for you to understand that brokerage is a broad term that includes several things. So, before you begin comparing the different brokers and the fees charged by them, let’s understand what’s included in broking charges
Brokerage charges levied by Depository Participants
Brokerage charge, as the term suggests, is a charge levied by a broker as a commission for services rendered. For example, if you conduct a transaction worth ₹100,000, your broker may levy a commission of 0.3%, which amounts to ₹300. Depository participants, who offer demat accounts and brokerage services levy brokerage charges for the below mentioned services:
• Account Opening charges
• Account maintenance charges (charged on an annual basis)
• Actual brokerage charges for every transaction – purchase or sale of investments
• Fund transfer charges
• Charges associated with research and analysis services provided
• Other miscellaneous charges
Types of brokers
There are two types of brokers that you as an investor can choose from. They are:
1. Full service brokers: Brokers providing all-inclusive trading services such as stock, currency and commodity trading along with research and advisory services, investment banking services and asset management services are known as full service brokers. Such brokers typically charge a brokerage charge of 0.01% to 0.50% based on the service requested.
2. Discount brokers: These are brokers who provide a trading platform and charge a commission in lieu of services provided. However, such brokers do not offer any advisory services. Such brokers generally levy a flat fee of ₹10 to ₹20 per intraday trade. However if you choose to employ the services of a discount broker, you must consider the account opening and maintenance charges, cost associated with service delivery, back-up facilities provided for intra-day trading and technology costs since all trades are conducted online.
Discount brokers may charge the lowest brokerage charges in India, but you may not get the advisory services that can help you make informed investment decisions. New investors should opt for full service brokers as opposed to discount brokers especially if they are not savvy enough to conduct trades on their own or if they require research and advisory services.
How to check demat account number
Out of all the fees charged by brokers, the demat account maintenance fee is a crucial one. This is a fee that you have to pay on an annual basis for using your demat account and conducting trades through it. New investors are generally confused about how to find demat account number. But finding the demat account number is simple. Just remember the following points:
• The depository partner sends a welcome note when you open your demat account. This note features a 16-digit number, which is your demat account number.
• This letter is sent by post and the number assigned depends on the depository with which your demat account is opened; the NSDL or CDSL.
• The format of the demat account number depends on the depository with which the account is opened.
• Individuals who open a demat account with CDSL are assigned a 16-digit demat account number like 1234567891012131
• Investors who open a demat account with NSDL will have a 16-digit demat account number starting with the letters IN followed by 14 numeric digits, for example IN12345678901112.
Created on Sep 15th 2019 21:54. Viewed 351 times.
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