Easy Ways To Open A De-Materialized Account
Though the company is under obligation to offer the securities in both physical and De-materialized mode, you have the choice to receive the securities in either mode.If you wish to have securities in De-materialized mode, you need to indicate the name of the depository and also of the depository participant with whom you have depository account in your application.It is, however desirable that you hold securities in De-materialized form as physical securities carry the risk of being fake, forged or stolen.Just as you have to open an account with a bank if you want to save your money, Nowadays, you need to open a De-materialized account if you want to buy or sell stocks.
HOW TO OPEN A De-Materialized ACCOUNT ?
If you wish to open a De-materialized account you just have to follow two simple steps: You approach a DP and fill up the De-materialized account-opening booklet. The Web sites of the N.S.D.L and the C.D.S.L list the approved DPs. You will then receive an account number and a DP ID number for the account. Write both the numbers in all future correspondence with your DPs.So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs , to open your De-materialized account. All these will show in your De-materialized account. So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions.
Is a De-materialized account a must? Nowadays, practically all trades have to be settled in De-materialized form. Although the market regulator, the Securities and Exchange Board of India (S.E.B.I), has allowed trades of up to 500 shares to be settled in physical form, nobody wants physical shares any more.So a De-materialized account is a must for trading and investing.Most banks are also DP participants, as are many brokers.You can choose your very own DP.To get a list, visit the N.S.D.L and C.D.S.L websites and see who the registered DPs are.A broker is separate from a DP. A broker is a member of the stock exchange, who buys and sells shares on his behalf and on behalf of his clients.A DP will just give you an account to hold those shares.You do not have to take the same DP that your broker takes. You can choose your own.
Banks also get advantage as they have number of branches. Some banks give the option of opening a De-materialized account in any branch, while others restrict themselves to a selected set of branches.Some private banks also provide online access to the De-materialized account. So, you can check on your holdings, transactions and status of requests through the net banking facility. A broker who acts as a DP may not be able to provide these services.
DE-MATERIALIZED ACCOUNT OPENING COST AND OTHER CHARGES
The cost of opening and holding a De-materialized account. There are four major charges usually levied on a De-materialized account: Account opening fee, annual maintenance fee, custodian fee and transaction fee. All the charges vary from DP to DP.Depending on the DP, there may or may not be an opening account fee. Private banks, such as I.C.I.C.I Bank, H.D.F.C bank and U.T.I bank, do not have it. However, players such as and the State Bank of India charge it. But most players levy this when you re-open a De-materialized account, though the Stock Holding Corporation offers a lifetime account opening fee, which allows you to hold on to your De-materialized account over a long period. This fee is always refundable.
Annual maintenance fee: This is also often called folio maintenance charges, and is usually levied in advance.
Custodian fee: This fee is charged every month and depends on the number of securities (international securities identification numbers ) held in the account. It usually ranges between Rs. 0.5 to Rs. 1 per international securities identification numbers per month.
DPs will not charge custody fee for international securities identification numbers on which the companies have paid one-time custody charges to the depository.
Transaction fee: The transaction fee is charged for crediting/debiting securities to and from the account on a every month basis. While some DPs, such as S.B.I, charge a flat fee per transaction, H.D.F.C Bank and I.C.I.C.I Bank peg the fee to they transaction value, subject to a maximum amount.
The fee also differs based on the kind of transaction . Some DPs charge only for debiting the securities while others charge for both. The DPs also charge if your instruction to buy/sell fails or is rejected.In addition, service tax is also charged by the DPs.
Article Source: FxTradingStock.com
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Learn more about Nifty Options Tips. Stop by Sam Mathew's site where you can find out all about Intraday share market Tips and what it can do for you.
by: Sam Mathew
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Date: Wed, 14 Jul 2010
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