Multiple Trading Accounts in India

Posted on 2nd Nov 2016
by TopShareBrokers Team


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Multiple Trading Accounts in India

The main motive of writing this article is to understand the need of more than one trading account and to answer few inquisitives like is it ok to have multiple trading accounts if at all it is needed, if not then why, with whom one can have multiple trading accounts and more. To begin with, a person can have more than one trading accounts in India on identical name. Let's see here how is it helpful and why:

Can I have two Trading Accounts on my name?

You can have more than one trading accounts on your name with different brokers however you can't have multiple trading accounts with the same broker.

Is it legal to open multiple trading accounts in India?

Yes, Its 100% legal to have multiple trading account, only constraint is you can't open two trading account with same broker.

Should I maintain two trading accounts, one with full service broker and other with discount broker?

It is in your interest to have more than one trading accounts. It is advisable to have two trading accounts, one with full service broker and other with Discount Broker. Both the account have their own Pros and cons. To take advantage of the positive things of both type of brokers i.e. full service broker and discount broker, one should have account with both.

What are the positive points a full service broker has over discount broker in Indian stock Market?

Full service Broker is like your one stop shop for all your investment needs right from research to advisory to investment banking to personal Relationship manager and so on. Some brokers even have banking and all the brokers offer Demat Services under one roof. Advantages of staying with full service broker are:

  • Investing in Forex, Mutual Funds, IPOs, FDs, Bonds and Insurance.
  • Branch offices and local trading terminals.
  • Portfolio Management
  • Investment Advisory
  • Trading in Stocks, Currency and Commodities
  • Personal Relationship Manager for tips and recommendations
  • Research Reports
  • Life Insurance, Personal Loans and Depository Services.
  • NRI Services
  • Margin Funding and high leverage and limit

Brokers like ICICI Direct, Kotak Securities, Axis Direct, SBI Securities, HDFC Securities, IDBICapital acts as a 3-in-1 service provider as they offer Banking, Demat and Trading account all under one umbrella.

Other type of full service brokers like ShareKhan, Angel Broking, Motilal Oswal, Ventura, Bonanza, IIFL, Reliance Securities, Geojit Paribas etc. offer all other services except bank Account. They are sometime refer as 2-in-1 full service providers.

What are the positive points a Discount Broker has over Full service Broker?

Discount brokers offer low and flat fee brokerage and monthly plans that gives you instant saving in brokerage by 80% to 90%. They are centrally located at one place and offer online services across the country. They are rich in advance technology and tools and high performance trading platforms for each and every device. They have strong online support through emails and knowledgebase, FAQs, online Feedback. The software usage is free of cost.

Advantages of Discount Brokers:

  • NO software charges
  • Low Account opening fee for Trading and demat.
  • Low or no AMC on trading and Demat Account.
  • No minimum brokerage, no hidden fee, no minimum deposit
  • Tools like brokerage calculator, margin and Span calculators
  • Referral Credits
  • Semi and fully automated trading

Popular Discount Brokers in India are ProStocks, Zerodha, Upstox(RKSV), SAS Online , Trade Smart Online , MyValueTrade, SAMCO.

Why should I have two trading accounts, one with full service broker and another with discount broker?

With the growing breed of Discount brokers in India, one should have account with them to avail low brokerage trading because discount brokers charge very low flat fee per order irrespective of the volume of order or fix monthly amount to do unlimited trading in stock market.

But if you already have account with full service broker as most of the investors and traders have, then you can keep your current account and can open one more account with discount broker.

Trading account with full service broker may come handy to enjoy the extended services like research and analysis, tips and recommendations, investing in IPOs, Mutual funds, Forex FDs, Bonds and Insurance.

Thus by keeping both the account you can save brokerage by 70 to 90% in your day to day trading as well as take advantage of all the investment options.

Second big advantage which we can say is, in case of technical issue with one broker you have option to hedge the trade with second account.

Diversify your portfolio within the brokers, in case one broker is good in one type of service and another in another service you can diversify your portfolio.

I want to move to discount broker, is it a good idea to close my current account with full service broker and move to discount broker?

No, we personally suggest you to keep both the accounts. Full service brokers are good for research, analysis reports and especially IPO, Mutual fund, charts and so on whereas discount brokers are good for low brokerage trading.

If I have multiple trading accounts, do I need multiple demat accounts?

No, You can have only one demat account and you can link multiple trading accounts with that. When you buy shares you can send share in same demat account with multiple trading accounts, but on selling side, you can sell shares only from the trading account where you have Power of Attorney(POA) mapped. POA is mandatory to debit shares online when the shares are sold.

With above said, you can have demat account with your discount broker and you can link your full service brokers trading account with discount broker demat account, so in case you invest in IPO, you can use your Full Service broker account and after allotment, you can use your discount broker trading account which is your POA account. That way you can invest in IPO and sell the stocks with very low brokerage.

What is the disadvantage with multiple trading accounts?

Other than manageability and charges there are no disadvantages to have multiple trading accounts.

Hope the article is helpful to you but if you still have questions, feel free to ask in the comment section.

Closing thought:

When it comes to choosing a brokerage, whether it is a traditional firm or a discount broker, there is no one perfect choice for every investor. It really depends on your personal needs and preferences, weighing the costs versus the benefits of each broker, and carefully comparing the level of services and features offered. Choose either one of them or choose both, it is up to you.

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  2016-11-02T07:22:05+00:00

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