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Everything You Need to Know About the Charges of Demat Accounts

12 Jan 2023 0 COMMENT

Demat Account and online trading has changed a trader's life in a lot of ways. It has become very convenient and cost-effective to trade in shares and other securities. Simply provide your Depository Participant (DP) with the appropriate instructions, and they will handle everything for you while you relax at home.

You do have to pay a small fee, though, for the convenience of being able to trade from the comfort of your home. Opening fees, safety (or custodian) fees, Annual Maintenance Charges (AMC), service charges, and Demat and Remat fees are all examples of Demat charges.

With competition growing and more brokers and banks providing Demat services, most DPs are now offering a lot of benefits in these payments. On one hand, many DPs have waived the fees for opening a Demat account and the fees for maintaining it for the first year. While on the other hand, some DPs offer things like better transaction fees.

Demat Account and online trading has changed a trader's life in a lot of ways. It has become very convenient and cost-effective to trade in shares and other securities. Simply provide your Depository Participant (DP) with the appropriate instructions, and they will handle everything for you while you relax at home.

You do have to pay a small fee, though, for the convenience of being able to trade from the comfort of your home. Opening fees, safety (or custodian) fees, Annual Maintenance Charges (AMC), service charges, and Demat and Remat fees are all examples of Demat charges.

With competition growing and more brokers and banks providing Demat services, most DPs are now offering a lot of benefits in these payments. On one hand, many DPs have waived the fees for opening a Demat account and the fees for maintaining it for the first year. While on the other hand, some DPs offer things like better transaction fees.

Different Types of Demat Account Charges

Here are some of the most common Demat account fees charges by brokers and Depository Participants:

Opening Charges:

For a Demat account to be opened, a DP, must be present. Most of the time, these are brokerage firms or banks where you can open a Demat account. Most of the time, your DP will ask you to pay a small amount to open a Demat account. In other cases, the DP might give you the option of using a Demat account for free for one year and then charging you the next year. In either case, it is best to find out how much it costs to open the Demat account you want. Before you choose a DP, make sure that the lower Demat account opening charges don't come at the cost of lower-quality services. ICICIdirect lets you open a Demat account for free.

Brokerage Charges:

For transactions, your Depository Participant would also charge a small brokerage fee. The fee is for the services that the DP grants you. You must pay this fee every time you perform a transaction using your Demat Account. Some DPs will charge transaction fees every month while others may charge them weekly. There are different transaction fees for buying and selling, meaning that some DPs might only charge you the service charge when you sell securities.

Account Maintenance Charges:

Along with the fee for opening a Demat account, you will also have to pay a fee every year to keep it running. These Demat account charges are small and can be anywhere between Rs 300 and 700. The amount of account maintenance charges will vary based on the DP and how much you spend in a year. The annual maintenance fee can be skipped if you are a small investor. The Securities and Exchange Board of India (SEBI) has made a Demat Account for investors with a holding of Rs 50,000 or less, called the Basic Services Demat Account (BSDA). You don't have to pay the annual maintenance fee if you have a BSDA.

Custodian Charges:

Before investing became electronic, people had to keep physical paper certificates for their shareholdings and other securities. The trader was put in charge of making sure these certificates were safe. But since Demat accounts came along, the DP is in charge of making sure that a trader's securities are safe and secure in the electronic or dematerialised form. Because of this, traders pay a small custodian fee based on how many securities they have in their Demat account.

Conclusion

Learning about the different fees that come with Demat trading is important because they will affect how much money you make from your investment. To win over investors, new stockbrokers may charge less than those who have been in the market for a long time. But when it comes to investing in the stock market, it's more important to find a broker you can trust and who has a good track record than to find the cheapest one.

Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. The contents herein above shall not be

considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or
damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell
or subscribe for securities or other financial instruments or any other product. Investments in securities market are
subject to market risks, read all the related documents carefully before investing. Investors should consult their
financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned
are solely for informational and educational purpose.