Changing Stock Broker Rules & Steps

Published on Friday, December 6, 2019 by Chittorgarh.com Team

Are you considering changing your share broker? It could be due to high brokerage, frequent downtime, poor customer services or for any other reason, changing the stock broker is easy. Traders who are considering changing share brokers, generally have questions like how to close the existing account, how to change demat account from one broker to another, how to transfer shares from one broker to another broker, etc. This article discusses the process, rules, and tips for changing share brokers.

When To Change Your Stock Broker

There can be many reasons for changing stock broker like-

• Another share broker offering a better brokerage plan
• You want to move to a new brokerage plan like the fixed fee or unlimited brokerage plan
• Unhappy with the trading platform provided by your current broker
• Issues in services

These are personal reasons for moving from one broker to another. Then there can be other reasons like your share broker shutting down due to default, non-profitability in business, etc.

When Your Share Broker Is Shutting Shop Due To Default

Share brokers are regulated by SEBI as well as exchanges like BSE, NSE & MCX, etc. Those offering depository services are members of NSDL and CDSL.

As per SEBI guidelines, a share broker who wishes to wind up its business, need to take the following steps-

1. The share broker has to communicate with the customers and exchanges 1 month in advance.
2. Exchanges issue a public notification for the closure of the company in leading newspapers. There's a cooling period of 2 months, for investors to make claims. The exchanges forward the application for closure to SEBI if no claims are received.
3. The broker also needs to ensure that all sub-broker registrations under him are canceled
4. All dues of clearing houses need to be cleared.
5. In case of default, exchanges recover money by freezing and selling assets of the broker. The exchanges also maintain an investor protection fund which can be used to compensate investors up to a maximum of Rs 15 lakh.

Steps To Change Stock Broker

Once you have decided to move to another broker for whatever reason then you need to take the following steps-

• Find a share broker- There are plentiful options in share broking. You have full-service brokers and online brokers in India. Depending on the reason you wish to move to another broker- low brokerage, lifetime free demat AMC, advanced trading platforms, etc., you will surely find a broker catering to your needs. Following articles will help you in your search-

5 Factors in choosing the best brokerage company in India

Top 10 share brokers in India (Best stock brokers in India)

Best stock broker for small investors in India (Low-cost trading)

Good Stock Broker - Qualities, Importance, and Tips

Best Online Brokers in India (Find Low Brokerage Trading Company)

Best Stock Broker for Day Trading

Discount Broker vs Full-Service Broker in India

Once you find the share broker of your choice, open a trading and demat account.

• Transfer your holdings - Demat accounts are opened with central depositories Central Depository Services (CDSL) or National Securities Depository (NSDL). If the new stock broker is a member of the same central depository then you transfer the shares online on your own. If the central depositories are different then you have to fill DIS (Delivery Instruction Slips) and submit it to your first broker.

• Close your account with the existing broker- You cannot close your account online/email/phone/chat. You have to fill, sign and send the account closure form to the company. Before initiating an account closure process, you need to-

1. Close all your open trade positions in Futures and Options.
2. Your accounts will not be closed if you have pending dues. So clear all your dues.
3. Sell or transfer all your securities from the current Demat account to your new Demat account.

To close your trading and demat account, you need to-

• Visit the broker's website and download the 'Account Closure Request' form.
• Get a print out of it and fill the form. If the account is opened jointly with other people, each person needs to sign it.
• Send it to the office address provided in the form.

The full and final settlement of the funds and securities due to you will be credited to the bank account number provided by you in the form.

It is advisable to follow up on the account closure process with the customer support team. You can call/email the customer support and inquire about the account closure after 15 days of sending the form.

How to change demat account from one broker to another?

You cannot change the demat account from one broker to another. However, you have the option to open a new demat account with another broker while keeping the existing demat active or close the existing demat and open a new account with another. The law permits the opening of multiple demat accounts. However, you will be paying AMC fees and other charges for keeping multiple accounts. So, if you really don't need multiple demat accounts then it is better to close the existing one and open a new demat with a different broker. Before initiating an account closure process, you need to-

1. Close all your open trade positions in Futures and Options.
2. Your accounts will not be closed if you have pending dues. So clear all your dues.
3. Sell or transfer all your securities from the current Demat account to your new Demat account.

To close your trading and demat account, you need to-

• Visit the broker's website and download the 'Account Closure Request' form.
• Get a print out of it and fill the form. If the account is opened jointly with other people, each person needs to sign it.
• Send it to the office address provided in the form.

How to transfer shares from other brokers to zerodha?

The process to transfer shares or any other holdings from other brokers to Zerodha depends on the central depository with which you have your current demat account. Zerodha is a depository participant (DP) with Central Depository Services Limited (CDSL) depository. If your current stock broker is a member of CDSL then you can transfer the shares online on your own. If the demat account is with NSDL then you have to fill a form and submit it to your first broker.

How to transfer shares from sharekhan to zerodha online?

Both Sharekhan and Zerodha are members of CDSL. So you can use the CDSL's internet-based facility EASIEST (electronic access to securities information and execution of secured transactions), to transfer shares from one DEMAT account to another online. To transfer shares online, you need to-

• Login to CDSL's website www.cdslindia.com 
• Click on the link 'Register Online' from the homepage.
• Select the facility (easiest).
• Enter your details like Login-Id, Email-Id, etc.
• Print the registration form, sign it and submit it to your stock broker.

Once you will receive the password at your email-Id, you can transfer shares online.

However, Zerodha recommends using DIS (Delivery Instruction Slips) for share transfers. It is because once you register for EASIEST, Zerodha loses the PoA (Power of Attorney) over the Demat account. This means that you cannot sell shares using Zerodha's trading platform as the broker will not be able to debit your shares from the Demat.

How to transfer shares from Kotak securities to zerodha?

Kotak is a depository participant (DP) with both NSDL and CDSL while Zerodha is a DP of CDSL. So, if your Kotak demat account is opened with CDSL then you can use the CDSL's internet-based facility EASIEST (electronic access to securities information and execution of secured transactions), to transfer shares from Kotak To Zerodha. The steps to transfer shares online is discussed above.

If your Kotak demat is with NSDL then you have to fill DIS (Delivery Instruction Slips) provided by Kotak for share transfers and submit it to Zerodha.

However, Zerodha recommends using DIS (delivery instruction slips) for share transfers even if it is inter-depository. It is because once you register for EASIEST, Zerodha loses the PoA (Power of Attorney) over the Demat account. This means that you cannot sell shares using Zerodha's trading platform as the broker will not be able to debit your shares from the Demat.