Hi,
i hold many shares in physical form (still
)
They are all in different names of my relatives. so i ll need to open multiple demat accounts and then transfer them into my account.
So pls suggest me suitable DP where i can open many (7-10) accounts.
My criteria:
- least acc opening charges
- fast acc opening (pref but not essential)
- least "demat" charges per certificate
- least overall trouble
- Need not have online trading account with it cos i m going to transfer all in my name.
and other criteria that u may find relevant.
Pls suggest.
Thansk.
In a fix
In line with global trends, depositories have switched over from value-based fee to a fixed structure, which seems to favour institutional investors
In May 2002, depository participants (DP) saw a new tariff structure imposed on them. Both the depositories, the NSE-promoted National Securities Depository Limited (NSDL) and BSE-promoted Central Depository Services Limited (CDSL) have taken a huge leap in an attempt to keep pace with developed markets.
Going by the global trend of a flat fee structure, NSDL and CDSL have revised their tariff structures for depository participants (DP). Instead of an ad valorem fee (value-based fee), they will switch to a flat rate from May 2002.
NSDLs custody charges, which were 0.01% of securities value earlier, have been revised to Rs 9 per security per annum. Settlement fee is fixed at a flat rate of Rs 10 per transaction as against 0.02% of value of securities earlier. Further, charges on pledge closure, pledge invocation and annual fee, which earlier varied between Rs 1-5 lakh, have been totally abolished. Pledge creation stands revised from 0.01% of securities value to Rs 25 per instruction. Securities borrowing fee is charged at Rs 25 per instruction while the rematerialisation fee is at a flat rate of Rs 10 per certificate.
Taking a cue from NSDL, CDSL also revised its charges but it has stuck to a combination of flat and variable charges. As against 0.005% of transaction value for credit and debit transactions, CDSL has fixed a rate of 0.01% of the transaction value payable per debit transaction, subject to a minimum of Rs 5 and maximum of Rs 12. Charges on purchase transactions, custody, holding of securities and annual charges are completely abolished.
Assuming a sale transaction of Rs 50,000, earlier an investor having an account with a DP associated with CDSL had to shell out Rs 2.5 (at 0.005% per transaction). While in NSDL, he paid Rs 10 (0.02% of transaction). Now with the flat rate structure, the investor still pays Rs 10 in NSDL, whereas in CDSL he pays Rs 5. Add to this the custody fee which NSDL charged.
This is apart from the individual mark-up charges of each DP. For instance, HDFC Bank, a DP for NSDL, pays 0.02% to NSDL per settlement but charges 0.05% (or Rs 25 whichever is higher) from its customers for providing depository services.
However, a closer look at the new rates reveals that the structure is more beneficial to volume-based transactions. For example, take a transaction of Rs 5,000. An investor paid Rs 1 (0.02% of Rs 5,000) to an NSDL DP and Rs 0.25 (0.005% of Rs 5,000) to CDSL DP. In the new rate structure, he has to pay Rs 10 to NSDL DP and Rs 0.5 (0.01% of Rs 5,000) to CDSL DP. Thus, he is paying more in the flat rate structure. Add to this the DP mark-up charges and the amount shoots up even further.
Now take a transaction of Rs 5 lakh. The investor earlier paid Rs 100 (0.02% of Rs 5 lakh) to an NSDL DP and Rs 25 (0.005% of Rs 5 lakh) to a CDSL DP. He now pays Rs 10 to the NSDL DP and Rs 50 (0.01% of Rs 5 lakh) to CDSL DP. Clearly, the new tariff structure favours high net-worth and institutional investors as they get to pay a flat rate as against a value-based fee. But it adversely impacts small investors with low value transactions.
A flat tariff structure may be the trend in developed markets but it fails to distinguish between small and large investors, unlike a value-based fee structure. A small investor will be treated on par with large institutional investors with huge investments and has to pay the same charges.
As transactions in developed markets are huge, levying a flat tariff makes absolute sense there. On the flip side, India has quite a large population of retail investors, and, hence, levying a similar rate for transactions as wide as Rs 5,000 and Rs 5 lakh may not be appropriate back home.
Most banks operating in India, including many foreign, levy a transaction-based fee for services like remittance or demand draft, rather than a flat rate, a common banking practice in the developed countries. For instance, State Bank of India charges Rs 3 per thousand for a demand draft, while HSBC charges 0.3% of the draft value. Though Sebi had initially asked the depositories to keep on hold the revised fee structure, it has recently given the depositories the go-ahead to revise the rates from May 2002.
CDSLs vice president marketing Prem Mariwala says the primary aim of a tariff revision was to go with the global trend of a flat rate structure. NSDLs senior vice president V R Narsimham says the overhead cost of NSDLs computer-based system depends upon the usage of the system. And, a flat fee structure is only natural for such projects to achieve economies of scale.
However, it is unclear to what extent investors, particularly retail, will be impacted as DPs fix their own rates for clients depending on their risk profile. Rates also depend on whether the DP is a bank-DP or broker-DP. A DP with high net-worth clients may find it prudent to fix a flat fee structure to average out his clients, while a DP with more number of retail clients may base his tariff on the value of transaction.
Most DPs are currently in the process of working out whether a revision in rates would be feasible. For instance, HDFC Bank, a DP for NSDL, has yet to decide whether it will revise its rates, following a change of NSDL rates.
However, Geojit Securities and Stock Holding Corporation of India Limited (SHCIL), DPs with NSDL, have a revised tariff structure ready to be implemented from 1 May 2002.
Geojit Securities has imposed a sale transaction charge of Rs 10 per transaction (it was nil earlier). The charge of 0.05% of transaction value for pledge creation is now at a flat rate of Rs 50 per transaction. Pledge invocation charges was 0.2% of transaction value earlier; it is now Rs 100 per transaction. However, Geojit has brought down its rematerialisation charges from Rs 25 to Rs 10 per certificate. Custody fee, purchase transaction charges and pledge closure charges have been maintained at nil.
SHCIL, too, has gone for a change in its tariff structure by introducing a combination of flat and variable charges. Its purchase transaction charges were 0.01% of the transaction value earlier with a minimum of Rs 25 and maximum Rs 100. This has been fixed at a flat rate of Rs 15 per transaction. Sale transaction charges have been lowered from 0.07% (minimum Rs 25) to 0.05% (minimum Rs 15). Charges for pledge creation and pledge closure also have been lowered from 0.03% to 0.02%, while invocation has been changed from 0.02% to Rs 50 per transaction.
Rematerialisation charges of 0.03% are now charged at a flat rate of Rs 25 per certificate. Notably, custody charges were nil earlier; but now have been imposed at Rs 1.5 per security per month.
The flat fee structure may have an upside. It will spin off innovations and attractive packages to lure customers. Earlier, with value-based fee, there was hardly any difference between one DP and another, except for the extent of mark-up. Now, besides the flat fee, which will vary and become competitive (see box: CDSL flags off rate war), frills will also come into play and so also after-sales services.
Demat muddle
http://www.capitalmarket.com/CMEdit/SFArtDis.asp?SFSNO=418&SFESNO=23
