Many people like me might face issue of high brokerage in Full-Service Brokers like Sharekhan, ICICI Direct, and HDFC Securities. The best way to avoid such high brokerage is to change Demat account to a discount broker like Zerodha. So here is the procedure to change your trading and Demat account from one broker to other and transfer shares.
Recently I closed demat and trading account in sharekhan and opened a new account in zerodha for obvious reasons of low brokerage. During this, I have also transferred my shares from sharekhan to zerodha.
Before we start let's know some terms used while opening account.
Each broker provides you trading account and demat account.
Trading account: In the trading account, we can trade (buy or sell) shares in open share market.
Demat account: Demat account is used as a bank where shares bought are deposited in, and where shares sold are taken from.
So you can open an only trading account in new broker firm if you want but then you need to link old demat account. I will advise opening both trading and demat account in same brokerage firm
CML report (Client master list) : Client Master Report is the certificate of your Demat account provided by the Demat Securities which contains all your information such as DP id, Client id, your name & address, linked Bank Details and some other information.
Steps to change your broker -
- Open trading account and demat account in new broker firm. Usually, it will get opened in 3 to 4 working days
- After opening account get CML form (Client Master List) from your new broker. it is used to linking your existing or new demat account with the new trading account with a broker.
- Ask for the closure form from the old account to close the account. Clear all dues or withdraw credit amount form you old account and then fill the form. Ensure all fields are correct.
- Tick on the transfer of shares in the closure from and submit it with CML report to the old broker. Get acknowledgement receipt from them.
- Within 1 to 2 working days you will get a call from the old broker regarding confirmation of account closing.
In week's time, you will get confirmation letter at your home and shares get a transfer to your new demat account.
- Voila! you are done!
Please check charges to transfer shares with closure. In my case, sharekhan didn't charge me anything for closure and transfer of shares to Zerodha. Also new broker not suppose to charge any amount for this transfer.
What if you are about to get Dividend at the same time?
Don't worry! it will be credited to the Bank account linked to your new demat account but it will take some more time than normal.
How to transfer shares without closing old account?
Suppose you want to transfer shares to your other account without closing current account. Then how to transfer shares normally.
At the time of opening account, you get DIS (Delivery instruction slip) booklet. Use that booklet's slip to transfer shares. If you don't have DIS then you can request for new DIS booklet. Fill all required fields in slip such as target DP id, shares ISIN codes etc.
Submit this slip to your brokerage firm. They will give you a customer copy for the same. Charges may vary from broker to broker but they are very minimal. Precaution should be taken with DIS to avoid misuse. Remember to strike out remaining shares rows which left empty.
Done! within the week shares will get credited to your other demat account.
All forms images are used here are for sampling purpose don't use it. Asks for original forms to your brokerage firm. Please get in contact with your broker customer care to understand these procedures more.