In the US, it is very simple to port your trading account from one broker to another. However, it is a lot more complicated in the Indian context. For example, it is possible to shift your demat account from one DP to another but it is not possible to shift your F&O open positions from one broker to another. In such cases, you will have to wind up positions with one broker before initiating with another broker. Here is how you must handle the broker shift in different circumstances.
When you want to shift your demat holdings to another broker
This is a fairly simple task. If you already have the demat credits of all the shares bought by you, then the task is simple. If the existing DP and the new DP are under the same depository (NSDL or CDSL), then you can yourself initiate the transfer of shares to the new DP online after registering.
However, for example, if your current DP is with CDSL and the new DP is with NSDL or vice versa, then you must submit a debit instruction slip (DIS) to your existing DP for transferring your current shareholdings to the new DP. The off-market transfer takes up to 2 days and then you can given an application to close the existing demat account. In case of any demat charges pending; you will have to pay up the same before the shares are transferred and the demat account is closed.
Once the demat account is closed, you can also give an application for closing the trading account. When you submit the account closure application, take a photocopy and get a stamped acknowledgement from your broker / DP as evidence for your records.
When you want shift your trading account but have open positions
This is not much of a problem in case of cash equities, but it is a challenge in case of futures and options. In this case, the open positions in futures and options are in your trading account and cannot be transferred to another broker. You will have to close these positions to zero before the account can be closed. A better way is to plan your account closure and take fresh positions in the new monthly F&O contract with the new broker.
However, your trading account could have a debit or a credit balance. In case of debit balance, the broker can hold your payouts and can put off closing your account till the debit in your account is cleared. Once the debit is made good, it behoves upon the broker to close the trading account. It is best not to leave an active trading account unused with any broker as it has the potential for misuse.
Here again, it is important that you take an acknowledgement from the broker about your debits / credits with copy of the ledger statement. Also, when you submit your application for closure of trading account, do it in duplicate and get a stamped acknowledgement from the broker.
What happens if you have credits in your trading account while closing the account?
This is normally the situation when investors and traders face the maximum problem. You may have bought the shares and may not have got the credit in the demat account. You may have sold shares and may not have got the bank credit. Alternately, your trading profits may have been held back. The first thing to do is to check if there are any debits as per your ledger and if acceptable then authorize the broker to adjust the same against your payouts.
Immediately, give a letter to your broker instructing them to transfer all pending stocks to your demat account and any credit balance to your bank account. Normally, the broker will execute your instruction within a week post which you can close the account. What do you do if the broker has still not abided by your instructions?
It is time to escalate the matter to the NSDL/CDSL in case of delivery delays and to the NSE/BSE in case of delayed payouts. If you still don’t find a resolution, you can write to SEBI with copy to the CEO and the Compliance Officer of the broker. That normally works!