A demat account has been a boon for trading. Traditionally, trading was a tedious process, with traders having to be physically present at the stock exchange. Brokers made it easy by being present instead of traders. The internet made trading convenient by providing trade portals for brokers. With advancements in technology and smartphones readily available to everyone, trading gained popularity. The demat account played a large role as it has made trading in the stock market accessible to everyone.
A demat account stores various types of securities in the demat form. The securities that can be stored are
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Equity
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Debentures
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Sovereign Gold Bonds
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Exchange Traded Funds (ETFs)
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Government Bonds
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Mutual Funds
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Tax-Free Bonds
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Certificates of Deposits.
They can be stored through the process of dematerialization.
What is Dematerialisation
It is the conversion of physical shares to digital format. Dematerialisation of securities is done by depositories with the help of depository participants (DP). A form must be filled out and submitted along with the securities that must be dematerialized. It’s a seamless process and has multiple benefits attached to it. It has reduced the multiple charges associated with trading and has made the whole trading process safer. Shares are not lost during trading and, due to its secure storage facility, storage is not a problem either . The settlement period has also been reduced from 14 days to 2 days, making trading a more liquid and viable investment option.
Types of Demat Account Charges
The demat account, being the best trading option, has certain charges associated with it. Although there are multiple charges involved, the most popular question that arises is “what are AMC charges for demat accounts.” Let us understand the various charges that are involved with a demat account.
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Account Opening Charges
DP collects a certain fee when you open a demat account with them. This amount isn’t standard and completely depends on the DP. Previously, there were heavy opening charges when the demat account was introduced, but now with its wide-scale adoption, the charges have been drastically reduced. Share India and a few other brokers have zero opening fees, meaning one can open a demat account free of cost. When opening a demat account, it's advisable to utilize a brokerage charges calculator to understand not only the account opening fees but also the ongoing charges associated with your trading activity, helping you make cost-effective decisions in partnership with brokers like Share India.
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Custodian Charges ( Security Charges)
The Demat account has reduced the burden of worry about the safe storage of your securities. All these securities are safe in electronic form and have various protocols surrounding them to boost their safety. For this purpose, DP can charge security fees based on the securities in your demat account. This can be as low as ₹1 and is generally charged annually unless specified.
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Transaction Changes
These charges are levied every time a transaction involving the demat account occurs. Transaction charges can be levied monthly as well, like custodian charges, but as multiple traders use their demat accounts as investment vehicles, they tend to make very few trades and cannot even trade for months on end. For this very purpose, depository participants tend to levy a fee for every transaction from the demat account.
Share India regarding brokerage having 0 or no cost on equity delivery. They charge 10/- for intraday trading or 0.03%, whichever is lower. For futures and options, they charge 10/- for each trade. The transactional charges levied by Share India are 15 for receipt or purchase and delivery or sale of securities. Use our brokerage calculator to estimate the brokerage fees you will incur when trading stocks.
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Annual Maintenance Charges
These charges are levied annually and must be paid by the account holder. Most of the above charges can be waived off, but DP ensures to collect of AMC charges. AMC means annual maintenance charges for demat accounts. The account maintenance charges in demat could range from 300/- to 900/-. Share India charges 300/- as AMC charges. Share India doesn't levy any annual maintenance charges in the first year, or the first 356 days, and 300 rupees must be paid per annum from the 2nd year of opening a demat account with Share India.
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Dematerializing & Remateralization Charges
These services are provided by the DP with the help of the depository. Dematerialization is when the securities are converted from their physical form to be stored in the demat account. Rematerlization is the process of converting the share in the demat account into the physical form. Physical shares can not be traded, and it is best to be stored in electronic format. Share India imposes 50/- per DRF plus 5/- per certificate
For dematerialisation purposes only. For remat services, the charges are 25/- exclusive of courier charges, which must be paid additionally.
Conclusion
There are multiple charges that are associated with a demat account with AMC for demat accounts recurring annually. It is good to be aware of all the charges related to a demat account. Knowing and comparing charges with other brokers can help you decide which broker to go with for everything to do with trading.
