Can I Map Multiple Demat Accounts to My Trading Account?

Trading on the stock market is not so easy. Being well versed with the market knowledge will be helpful, but there will be a chance of gaining a loss. SEBI sets specific rules and obligations to conduct fair trading from the company and the investor side. The Indian stock market is revolutionizing with the digital world to provide users with smooth trading. You may now wonder how to link a Demat account to a trading account? The user can simply link a Demat account to a trading account with just one click on their smartphone.

Even the most experienced traders can have difficulty navigating the machinery facilitating the stock market’s transactions since the rules constantly change. Depositories, exchanges, and brokerages have different rules.

There can be a lot of confusion when opening Demat accounts. This is because Demat accounts contain all of your assets – securities, stocks, bonds, and others – that you own. However, you can’t just debit or credit this account when you make transactions.

Mapping Multiple Demat Accounts to a Trading Account – Is it Possible?

Both trading and Demat accounts are essential for trading. Every stock broker firm has its own set of charges, database, and interface to manage trades. Multi-tiered Demat accounts are not a good investment. Instead, open a Demat account through the same stockbroker where you have opened a trading account. 

So that the process of linking a Demat account to a trading account can get done quickly without any waste of time. The Demat account has the functionality to lie unused for a longer time and get deactivated by the Depository after a prior notice or permission from the Demat account holder.

When it comes to the functionalities of a Demat account, you can say that a Demat account holds all types of financial securities, which are stocks, bonds, and other securities you want. 

Securities and Exchange Board of India or any other authorities do not regulate the number of Demat accounts opened. However, here are a few things to take into consideration before opening a Demat account in India – 

1. You cannot have more than one Demat account with the same broker: This is part of the conditions for having more than one Demat account. One condition is that more than one Demat account cannot come from the same DP.
2. Account opening is very straightforward, and you can complete the entire process online, but there are certain charges like account opening fees and yearly maintenance charges (AMCs). 
3. In case of an unused Demat account, the DP may freeze the account. To reinstate the Demat account, you will have to complete the e-KYC again.
4. Monitoring your finances while setting up multiple Demat accounts alone is not sufficient. You must keep a close eye on the transactions conducted through the many Demat accounts. It will help you gauge your financial status.
5. Demat accounts should get opened rationally. While it is not against the law to open more than one Demat account, some rationale should accompany it.
6. Portfolio categorization: Many people trade and invest according to market conditions. Their portfolio can be divided based on stocks held for the long term and the rest for swing trading or intraday trading. Having multiple Demat accounts can help segregate your portfolio effectively. 
7. Stockbrokers offer bundled Demat and trading accounts that come with opening a Demat account. It’s unnecessary to have more than one trading account with a Demat account. Having multiple DematDemat accounts allows you to access research and analysis from various financial institutions. This information can help you increase your investment and trading activities.
8. Keeping your shares with more than one stockbroker is relatively safer than keeping them with a bank. This is because the financial securities get handled and held by the depositories. They do not fall under the authority of your stockbrokers. 
9. Depositories manage and store financial securities, and stockbrokers do not have access to them. Therefore, shares cannot get removed from a Demat account without your permission.

Mapping Multiple Demat Accounts

Many professionals choose to open multiple Demat accounts as per their investment method. The Demat account offers multiple benefits and helps to keep your trading portfolios segregated. In addition, you can create different period investments on your multiple Demat accounts based on your investment duration.

Each Demat account individual stock broker will provide you with other news and insight to improve your investment. Of course, you can’t use the same stockbroker to open multiple Demat accounts, but you can use a single trading account for the different Demat accounts you choose to map. 

But remember that mapping one trading account can be complicated, and the amount charged for linking multiple Demat accounts to a trading account will be high. The annual maintenance of multiple Demat accounts will differ and can miscalculate your financial goals.

Conclusion

Opening and mapping multiple Demat accounts into trading accounts is hectic work. First, you must learn about your stockbroker policy regarding mapping multiple Demat accounts to different trading accounts. It is the investor’s choice to go for multiple Demat accounts and a single trading account.

Frequently Asked Questions (FAQs)