Hi - I recently noticed that my broker ( who is also the DP ) is charging me more than necessary by breaking a demat transaction into multiple parts. If I hold 1000 shares and sell them all on the same day the result is the same whether I use 10 orders or 1. As far as demat is concerned there should be a single communication from the DP to the depository CDSL but I keep seeing as many demat transactions as there were sell orders. This is only with the broker in question not Zerodha or any other I have used in the past
Please advise if you have any insights. Thanks !
I guess you’re talking about DP charges which is debited per script per day basis. Whether you sell 1 share or 1000 if the script (company) is the same in a single day, the charges will be debited once. However, if you sell 1 share of multiple scripts (company), dp charges will be debited for each script. Refer to this article for more details:
Exactly . The charges are meant to be applied per scrip per day as the DP aggregates the orders before sending the info to CDSL/NSDL which only require trade level data. My broker, Fyers ,used to follow the same but recently changed to “per order” without even informing the clients. It’s cost thousands more in DP charges for no reason
Your understanding isn’t correct.
Debit charges are per instruction, and today, it has become imperative for brokers to send debit instructions multiple times to the depository based on sell transaction carried out by users.
This is because, as per Exchange guidelines, if a broker has to give you credit against sale of holdings to take other trades, they can do so only after earmarking the securities for debit. So if you sell the same holding multiple times, brokers end up earmarking securities multiple times since they offer instant credit against sale to be used for other trades.
Every earmarking instruction is debited separately by the depository. So if you’ve sold a total of 127 shares as 60 + 60 + 5 + 2, and if your broker has earmarked accordingly, you’ll see multiple debit entries of 60, 60, 5 and 2 and not a single entry of 127.
It’s the same at Zerodha too (where we pay Depository charges multiple times, but do charge investors only once), but Zerodha for now has decided to absorb the cost and does not pass it on the customer.
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There was NO offering of credit at all as it was a BTST sale. So, does your explanation still apply ? And when exactly did the guidelines change ? I have seen them levy charges per scrip as recently as 3rd Sept. Besides, what might excuse the fact that they didn’t even inform us of this change.
BTW, why would Zerodha let clients execute sales at a loss ? If a sale is broken into many parts then that’s what would happen, right ? And could the broker not offer an option to get credit at the end of the session instead if they wish to avoid the manifold increase in demat transaction charges ?
Could you share some info on the timing /mechanism of communication of instructions between the DP and the depository ?
At Zerodha, even for a BTST sale, we move securities to the investor’s account and earmark it for payin. If the securities weren’t transferred, then they shouldn’t have applied the debit fee.
Sorry, I can’t answer for them.
hmm, it is what it is. At the moment we’re absorbing the cost, and have requested the depositories to look into the possibility of applying a single charge/ISIN/day regardless of the frequency of earmark.
About brokers offering the option - That’s not possible. As I’d said earlier, most brokers tend to give instant credit against sale. Users can’t be given the choice between getting instant credit (on instant earmark) vs not getting credit (EOD earmark)
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I wasn’t asking you to answer on their behalf. Just seems unethical to change the terms of service without informing your users
I will take your word on Zerodha absorbing losses on multipart sales. Just haven’t known many businesses who’d do that if they had a choice and it would appear that you do. For a client base as large as yours I’d think the losses would be significant.
Not quite sure why the clients can’t be offered a choice to opt for EOD credit to avoid a manifold increase in demat transaction charges but you have shared more in a couple of posts than I could get out of my broker in weeks. I appreciate that 
One can still get stuck on technicalities and argue that there was no change in terms of service.
DPs in their tariff sheet quote the charges per demat debit. When securities are sold in bits and earmarked accordingly, the debits also happen in bits. So technically, one can argue that there is no increase in fee
The number of users who sell securities in bits, is a smaller percentage. But again, there’s nothing that’s stopping us from charging DP fee multiple times for an ISIN. We will let our users know, should there be a change in policy.
Suddenly you’ve to create a system that records this choice from the user, build systems that decide whether to give/not give credit basis their choice. Too much complexity, to accommodate the request of a few clients
A sale that earlier resulted in a single debit now causes as many as there are orders. The clients have no reason to suspect a change without intimation from the service provider.
If there’s still been a change from “per scrip” to “per executed order” I’d say it’s quite clear that it behoves the service provider to inform the clients of the same.
that would at least give us the chance to change brokers or to adapt our selling behavior. to deny us that chance seems unethical at the very least.
Any reasonable person would support your choice of informing the users over what I experienced with my broker
Any update?
Which broker is that?
Fyers…Zerodha isn’t doin this…
As explained above by Venu , this is being done to continue offering instant credit for sale of holdings despite some changes made by SEBI. some brokers have done it, some haven’t . the problem lies in not informing the clients of the change . Fyers told me after 6 months.