Are you looking to have two demat accounts? are you scared whether it is legal? are you thinking that SEBI might ban you or something from trading?
Well, it’s not that complex honestly.
Let’s get to the depth of this burning question a lot of beginners and intermediate traders have in this detailed review. We also have a video and a podcast for you if you prefer other media formats.
We won’t keep you hanging on this one, especially when it comes to a demat account!
Yes, You can have two Demat Accounts or for that matter, any number of Demat or Trading Accounts.
What is the point of having Two Demat Accounts, huh?
Multiple reasons, honestly!
A lot of traders would want to have the best of both worlds. For instance, quite a few traders prefer to have parallel trading accounts with a full-service stockbroker as well as a discount stockbroker. What happens with that set-up is that the user can pick and choose a stockbroker based on the kind of trades he/she is looking to put up.
You would know that a lot of aspects that come into picture when you are picking a stockbroker. Areas such as:
And this goes without asking that a single stockbroker cannot be champion in all these aspects in one go. There are pros and cons in each broker and in case you want more, well you can go ahead and open two demat/trading accounts.
Furthermore, it makes complete sense to open two demat accounts as long as you are serious about trading.
Then, there are few traders who keep two demat accounts just to create a segregation between their trading and investment practices. This keeps them aligned with their goals with less room for any confusion.
Is it Legal to have Two Demat accounts?
Yes, absolutely it is legal. Although, you need to understand that it is your PAN card that is the unique identifier and this is the key that is linked to your multiple demat accounts. So, in the background, if SEBI is tracking your trades, it is through the accounts linked to your PAN card and not individual trading accounts.
At the same time, you cannot have two Demat accounts with the same stockbroker. You are allowed to open multiple demat accounts with different stockbrokers.
Until recently, linking your Aadhaar card with your Demat accounts has been mandatory as well. Thus, you have to take care of that aspect, even though, it is a one time task whenever you open a new Demat account.
Is there any disadvantage of having multiple demat accounts or even multiple trading accounts for that matter?
Well yea, there are some concerns as well.
When you open multiple demat or trading accounts, you need to make sure of the following:
Pay annual maintenance charges (AMC) separately for each of these different accounts
Track each individual demat accounts with the stocks kept or the trading accounts with their respective monetary balances
If your Demat account stays unused for a longer duration, then there is a possibility that the account may be frozen post some notifications sent to you. You will be required to undergo eKYC again in order to get it reactivated.
In case, you have faced any other concern(s), feel free to add those in the comments section below.
What about my bank account? Can I link my Bank account to multiple trading accounts?
Yes, you may link any number of trading accounts with your bank account. At the end of the day, it is up to you how much you want to trade through what type of trading account. In fact, it becomes much easier to track all your credits and debits from multiple trading accounts using a single bank account.
Thus, in a sense, it is recommended that you must use a single bank account with your multiple trading accounts to avoid any chaos or confusion later.
Do I have to close any of my existing demat or trading account before I open a new one?
No, you can run these accounts in parallel. All of that is allowed by SEBI and you are not going to violate any of the norms laid out.
Do I need to open multiple trading accounts for multiple Demat accounts?
No, no, no!
You may choose to keep one demat account and link multiple trading accounts with the same Demat account. When you do so, you can trade via different trading accounts of yours but all the shares you end up buying get stored in that single Demat account you have. It is like going to a mall with a bag and keeping all your purchases from different stores in the same bag.
Can I Open 2 Demat accounts with the same stockbroker?
Well, that’s a no again!
This is one of the very few limitations for traders that you cannot have more than one Demat account with the same stockbroker or DP (Depository Participant) as they call it.
For example, if you have a Demat account with ICICI Direct, you cannot open another Demat account with ICICI Direct. You may choose from the range of other stockbrokers such as 5Paisa, IIFL, Zerodha and so on but not ICICI Direct.
Is it Safe to keep my shares with various stockbrokers through multiple Demat Accounts?
In all sincerity, you need to understand that stockbrokers do not have any control whatsoever when it comes to the purchased stocks in our demat account. In fact, it is the depository (CDSL, NSDL) itself that has the charge of all the shares a trader has kept in the Demat account.
Furthermore, these depositories are supported by SEBI, indices and other regulatory bodies in the background.
Wow, what a relief. Isn’t it?
Hopefully, a lot of your queries got resolved in this piece of the questionnaire. Nonetheless, in case you have any other query or concern running your mind, go ahead and write that up in the comments section below and we will respond with an answer as soon as can.
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