How to Change Stock Broker Without Selling Your Shares

Can You Change Your Stockbroker Without Selling Shares?

Yes. Shares held in a demat account can generally be transferred to another demat account without them being sold on the stock exchange. That's a transfer of securities, not a sale on the market.

Your existing investments are still yours. The method of transfer will depend on a number of factors including whether both accounts are with the same depository (CDSL or NSDL), and whether the new account has the same ownership details.

Importantly you won't automatically carry over all your services and balances if you change brokers. Your trading account, your open orders, your pledged shares and your unused funds will all need to be looked at separately.

Steps to Change Your Broker Without Selling Shares

1. Open a Demat Account With the New Broker

Pick a SEBI registered broker and go through the account opening and KYC process. You may be able to use an existing Demat account if it satisfies the requirements of the new broker.

Check the account holder names, the PAN details and the account information very carefully. Matching of the ownership details will go a long way to prevent any transfer delays.

2. Check Your Existing Holdings

Before you go ahead and do the transfer, have a look at your portfolio and download your most recent Demat statement. Note down your shares, the quantities, the dates of purchase and the acquisition costs.

Also check that you haven't got any pledged shares, any outstanding dues, any open orders or any active derivatives positions. All of those may need to be dealt with separately prior to you closing or otherwise ceasing to use the old account.

3. Transfer Your Shares to the New Demat Account

There are two common ways to transfer securities:

• Online transfer: Account holders with an eligible CDSL account can use CDSL's Easiest facility to submit their securities transfer instructions online. The transfer options available will of course be dependent on your account registration and authentication requirements.
• Through your Depository Participant (DP): You can ask your existing broker or DP for the appropriate transfer or account closure forms and provide the necessary instructions.

If the old and new accounts are with different depositories (e.g. CDSL and NSDL) then an inter-depository transfer will be required. Only securities which are supported by both depositories can be transferred via this route.

Just follow the instructions of your broker or DP and check the receiving account details are correct before authorising the transfer.

4. Verify the Shares in Your New Account

Once the transfer has been processed log into the new Demat account and check that the correct securities and quantities have indeed been credited. Compare the new holdings with your prior statement and report any discrepancy immediately.

Keep your old account statements, your contract notes and your purchase records. Those will be useful in tracking your original cost basis and your holding periods when you go to sell.

5. Close the Old Account, If Required

If you no longer wish to use the previous broker then simply submit an account closure request (after you have confirmed that all your eligible holdings have been transferred). NSDL recommends that investors open or identify the receiving Demat account, complete and submit the prescribed closure form with the details of the receiving account and allow the DP to verify and process the request.

Before you close the account, make sure you've cleared any dues and that there are no securities or other balances outstanding. If you're intending to keep the old Demat account then check that the annual maintenance and any other applicable charges will be continuing.

Will You Pay Charges or Taxes When Transferring Shares?

The transfer could be subject to fees imposed by your broker or DP (depositary/payments firm) depending on the provider and the method of transfer. The exact fee will be set out in the relevant tariff so it's worth checking that prior to proceeding.

Transferring shares between your own Demat accounts is usually a different proposition to selling them on the exchange. You should keep your original purchase records and if your circumstances are at all unusual then it would be wise to seek the advice of a tax professional. Don't assume that all types of securities transfer are treated the same for tax purposes.

What About Mutual Funds and Other Investments?

Mutual fund units, ETFs and other securities will have different transfer arrangements depending on how they're held and what facilities the providers offer. You need to check the process for each of your investments rather than assume that your shares will simply transfer automatically.

Final Checklist Before Switching Brokers

• Open and verify the new Demat account.
• Download your existing holdings and your transaction statements.
• Check pledged shares, open positions and outstanding dues.
• Confirm the transfer charges and carry out the required instructions.
• Verify each holding in the new account.
• Just close the old account once you've checked that there's nothing left.

Conclusion

You don't necessarily have to sell your shares if you're changing your stockbroker. You can open a new account, transfer your eligible securities and verify the credits and continue to hold your shares. You'll need to plan the switch carefully, check the relevant procedure and of course keep your records.