Demat Account : An essential requisite

Hope you have a very clear financial planning, it is about time to get into some action. Based on your profile, if you have chosen to invest on equities, bonds, commodities or derivatives then most certainly you will need a “Demat Account”

Without getting too much into specifics, this is your electronic warehouse where you can hold all shares, government securities, exchange-traded funds, bonds and mutual funds in one place. Essentially, demat based electronic consolidation was set up with an intention to enable easier trade.

Demat account working
Demat account working

There are two depositories that provide free demat account service: NSDL and CDSL. But retail investors like us will need an intermediary depository participant, aka stockbrokers, to transact and access NSDL and CDSL demat services. In India, we have more than 300 stockbrokers registered in various bodies like SEBI, NSE etc.

There are three main types of stockbrokers:

Full Service Brokerage demat account

A full service brokerage provides you a demat account that allows you to trade everything under the sun: stocks, mutual funds, ETFs, Bonds, Commodity, SGBs and what nots. In addition, they offer a large swathe of products and services like retirement planning, ULIPs, insurances etc.

They usually tend to have a fully blow research and support team to hand hold you. Obviously, there is such thing called no free lunch, they pass on their significant overheads to you in the form of hefty brokerage fees and charges.

DistinctionAngelSharekhanEdelweiss (Elite)
Opening ChargesFreeFreeFree
EquityFree0.50%0.30%
Equity Intraday (per order)INR 20.000.10%0.03%
Commodities (per order)INR 20.000.03%0.02% and INR 20
Derivatives (per order)INR 20.000.10%0.03% and INR 75
Intraday Margin (Upto)48x10x10x
AMC (p.a)INR 450.00INR 500.00
Research wing / Personal AssistanceYesYesYes
Open Account in Angel BrokingOpen Account in SharekhanOpen Account in Edelweiss

Bank based Brokerage demat account

Firstly, they are pretty much “Full service Brokers” run by bank institutions like Kotak, HDFC, ICICI, SBI etc. as they provide all brokerage services mentioned above. Secondly and more importantly, they also provide banking and insurance services. Therefore, it’s one stop solution for all demat, trading and banking needs of an individual. A 3-in-1 account for all your needs.

3-in-1 Bank account
Save, Share and Store

Finally, major reason behind their success is that we feels safer with the banks compared to pure brokers. Lately, few pure brokers are venturing into providing banking solutions via tie-ups and partnership to gain this trust factor and tap into the potential.

DistinctionKotakICICIHDFC
Opening ChargesINR 750.00INR 975.00Free
EquityLower of INR 21 or 2.5% of the transaction0.55%Lower of INR 25 or 0.5%
Equity Intraday (per order)Lower of INR 21 or 2.5% of the transaction0.275%Lower of INR 25 or 0.05%
Commodities (per order)Lower of Rs. 21 or 2.5% of the transactionNALower of INR 20 or 0.025%
Derivatives (per order)Lower of INR 21 or 2.5% of the transaction0.05%Lower of INR 25 or 0.05%
Intraday Margin (Upto)50x25x14x
AMC (p.a)INR 600.00INR 700.00INR 750.00
Research wing / Personal AssistanceYesYesYes
Open Account in Kotak SecuritiesOpen Account in ICICIDirectOpen Account in HDFC Securities
Banks
Having earned the trust from clientele, investors trust their demat brokerage solution. Off late, the ease with which existing customers can open their demat has only helped banks to command a premium for their brokerage services

Discount Brokerage demat account

In this age of data, information and automation, high chances many of investors started being frustrated with exorbitant fees and charges levied by full service brokerages leading to the offshoot of discount brokerages.

 In line with the expectation, they are a simple no nonsense medium that does nothing but lets you trade. There are no research teams, no personal advisor, no needless overheads. This was fast food equivalent of investment brokering. You control your entire investment.

DistinctionZerodha5 PaisaUpstox
Opening ChargesINR 300.00FreeINR 300.00
EquityNilINR 20.00Free
Equity Intraday (per order)Lower of INR 20 and 0.03%INR 20.00Lower of INR 20 and 0.05%
Commodities (per order)Lower of INR 20 and 0.03%INR 20.00Lower of INR 20 and 0.05%
Derivatives (per order)Lower of INR 20 and 0.03%INR 20.00Lower of INR 20 and 0.05%
Intraday Margin (Upto)15x3.5x15x
AMC (p.a)INR 300.00INR 540.00INR 300.00
Research wing / Personal AssistanceNoNoNo
 Open Account in ZerodhaOpen Account in 5PaisaOpen Account in Upstox

So based on what kind of investor you want to be, choose an appropriate brokerage type. A word of advice, don’t feel overwhelmed to choose “Discount brokerage” just because of your current knowledge, like investment you can grow your knowledge through patient systemic reading and interacting. Also, fret not much, you can always do a demat transfer at a later point in time if you are not satisfied with the choice you are making.

Alright a fair disclaimer, we wanted to help you jump start your investment journey and so what, we chose what we believe are top 3 brokerages in the each categories and compared them for your information along with the link using which you can kick start the process. Please be informed that this is not by any means a recommendation. You can do your own research before choosing a suitable broker.

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