A trading account enables you to purchase and sell shares and other securities on a stock exchange. If you’re interested in participating in the wealth-creation process of the Indian financial markets, having a trading account is an important prerequisite.
That said, before you go ahead and open an account for yourself, you need to first understand the different trading account charges that stockbrokers levy and what they mean. Here’s a detailed guide on some of the commonly levied trading account fees and charges.
Before you learn about the trading account opening free and charges, first take a look at how to open a trading account with BFSL.
How to Open a Trading Account
Follow these steps to open Demat & Trading Account with BFSL:
- Step 1: Visit the online Demat and Trading Account Opening Form.The process can be completed online. BFSL offers quick account opening with zero account opening charge.
- Step 2: Then enter your basic details like name, mobile number, email ID, PAN number, etc. These are called KYC details and it is mandatory to provide these details to open an account.
- Step 3: Enter your bank account details that you want to link to your trading account.
- Step 4: Upload KYC documents (soft copies), such as PAN card, Aadhaar Card, photo and signature. These are proof documents to verify your address and identity.
- Step 5: Finish In-Person Verification (IPV) where you have to record a 30s video of yourself reading the provided script, to confirm your identity.
- Step 6: E-sign the form through OTP sent on Aadhaar linked mobile number. This is the way to digitally sign your trading account opening form.
- Step 7: Review & Submit the application. The application will be checked by the verification team of the stockbroker. In case, there is any mismatch between the details entered in form and the proof document provided, the application will be rejected.
- After successful verification, you will be provided a login ID and password to access the trading account.
Trading Account Charges
Stockbrokers often levy a gamut of trading fees for different kinds of transactions that you make. These fees and charges on trading accounts are a major source of revenue for brokers. Let’s take a look at the various trading account charges that investors such as yourselves will have to pay.
- Trading Account Processing Charges
The account processing charge is a nominal fee that’s levied for processing your trading account opening application. Fortunately, except for a few entities, not many stockbrokers levy this particular trading account charge.
- Trading Account Opening Charges
The trading account opening charge is a one-time fee that’s levied by stockbrokers at the time of opening the account. It can range anywhere from ₹500 to ₹999,excluding GST and other taxes. Most stockbrokers usually waive off the trading account opening charges.
- Trading Account Maintenance Charges (AMCs)
The Account Maintenance Charge (AMC) is a recurring fee that’s levied annually by the stockbroker in exchange for providing trading account services and maintaining the account. As with the other trading account charges, quite a few stockbrokers don’t levy this particular fee.
- Fund Transfer Charges
You need to first transfer funds into your trading account to be able to purchase shares and other securities via the stock exchanges. The fund transfer charge is a nominal fee that brokers levy for transferring funds from your bank account to your trading account. These trading account fees are levied to offset the fund transfer payment gateway costs incurred by the broker.
- Brokerage Charges
Brokerage is one of the most important trading account charges that you need to know about. Stockbrokers levy brokerage for every single buy and sell transaction that you make via their trading account. The amount of brokerage per transaction that you’re liable to pay may vary depending on the stockbroker. The brokerage may be charged as a flat-rate fee per transaction or as a percentage of the total transaction value.
- Securities Transaction Tax (STT)
STT does not form a part of the trading account charges levied by the stockbroker. Instead, it is the tax that every trader and investor is required to pay to the government on both buy and sell transactions. The rate of STT differs depending on the trade segment.
- Transaction Charges
The transaction charge is a fee that’s levied by the broker for every single trade that you make. Although these trading account charges are levied by the stockbroker, it is in fact paid to the stock exchange in which the trade was executed. These charges are levied as a percentage of the total trade value and will vary depending on the stock exchange and the trade segment.
- Auto Square-Off Charges
For intraday trades, you’re required to square off all of your open positions before 3.20 PM (IST). If the positions remain open beyond the stipulated time, the stockbroker will automatically square them off for you. However, brokers generally levy a nominal fee for triggering their auto square-off mechanism. The trading account fees for auto square-off usually range between ₹40 to ₹60 per transaction.
- Off-Market Transfer Charges
An off-market transfer is the transfer of securities from one demat account to another without the involvement of the stock exchange. In the case of such transfers, the stockbroker usually levies a nominal off-market transfer charge per transaction.
- Delayed Payment Charges
Delayed payment charges are levied by your broker if your trading account has a negative fund balance. It is represented as a percentage of the total negative fund balance in your account and is levied every day until you clear off your dues.
- Physical Client Master Report (CMR) Charges
The Client Master Report (CMR) is a document that consists of key details such as the name of the client, address as per the broker’s records, date of birth, demat ID, BO ID, nomination details and bank details, among others.
The CMR is usually issued as a digitally signed PDF document. However, you can place a request for a physical CMR copy as well. Stockbrokers often levy a fee for processing such requests. This trading account fee is inclusive of printing charges, courier charges and GST.
Conclusion
In addition to the ones mentioned above, you may also be liable to pay other trading account fees and charges like SEBI turnover charges, auction charges and stamp duty. If you’re a regular trader, it is important to pay attention to the trading fees since they can quickly add up as the volume of trades increases. Therefore, always make sure to compare the trading account charges of multiple stockbrokers before opening an account. This will allow you to make a more informed decision.
