A demat account has made stock markets accessible to more retail investors. It has made investing convenient. A continuous surge in the number of demat account openings indicates its usage and popularity – a 34% increase on a yearly basis. Generally, investors make an informed decision while short-listing stockbrokers for demat account opening. Still, there can be various reasons to transfer securities from one demat account to another.
Why One Needs to Transfer Shares from One Demat Account to Another
- To opt for another brokerage firm: Investors may want to change their brokerage firm for a variety of reasons, including reduced charges associated with a demat account, high security, better trading services, ease of transaction, advanced trading apps, digital advisory services, etc. Individuals may look for a discount broker for such benefits.
- Separate Demat Account for Securities Management: Investors may want to segregate their financial assets for different objectives. For example, maintaining different portfolios for the short-term, like funding a car and long-term goals, like retirement planning.
- Consolidate Holdings: When it comes to defining ‘what is a demat account’, it is important to mention that a demat account can hold numerous stocks and other financial assets. Investors may have multiple demat accounts with different brokers and they may want to consolidate all securities into a single account. Then, they can access this option of share transfer.
Inter- and Intra-depository Share Transfer
There are two types of share transfer:
- Intra-depository Transfer: It is the case when new and old brokers are registered with the same depository – National Securities Depository Limited (NSDL) or Central Depository Services Limited (CDSL). It means share transfer within a depository.
- Inter-depository Transfer: It is the case when new and old brokers are serving investors with the demat services of different depositories. The old broker may be a depository participant of the NSDL and the new one may be registered with the CDSL or vice-versa.
Ways or Modes of Share Transfer
Securities can be transferred by following an online process or one can take an offline route called off-market transfer. To save on demat account charges, consider a renowned discount broker registered with the SEBI (Securities Exchange Board of India).
The steps involved in both modes of share transfer are explained below:
For the online transfer of shares, the demat account holder can register on the depository’s official website and submit the acknowledgment to the broker.
- Refer to the depository’s official website and get registered using the ‘New User Registration.’ On the CDSL website, go to the ‘EASIEST’ Facility. For the NSDL website, go to the ‘Speed-e’ Facility.
- Input details of the Demat account details with the old broker – Broker ID, Client ID, registered email ID, grouping, etc., and enter the received OTP (one-time password).
- Submit the request form.
Investors need to print the form and submit it to the current broker. The broker will verify the details with the depository. After successful verification, the broker will send the password to the registered email. Login using the provided password and start transferring shares.
Offline Mode or Off-market Transfer
Offline mode involves sending the share transfer request using a Delivery Instruction Slip (DIS):
- Obtain the delivery instruction slip (DIS) booklet from the existing broker
- Fill in the correct ISIN (International Securities Identification Number) Numbers of the securities to be transferred. Check it twice as it validates the ID shares
- Write benefit owner ID/Target Client ID carefully. It is the unique code consisting of the client’s ID and the broker’s ID
- Choose the type of transfer – intra-depository transfer or inter-depository transfer
- Sign and submit the filled DIS to the existing broker and receive the acknowledgment slip
The depository will process the share transfer and shares can be reflected in the new demat account within 3-5 days.
These are the steps to be followed by you for share transfer. Choose a convenient mode and transfer shares from one demat account to another.
I am Zoya Arya, and I have been working as Content Writer at Rananjay Exports for past 2 years. My expertise lies in researching and writing both technical and fashion content. I have written multiple articles on Gemstone Jewelry like moonstone jewelry and other stones over the past years and would love to explore more on the same in future. I hope my work keeps mesmerizing you and helps you in the future.