1. “Instead of multiple applications to different fund houses requesting a change of address, the investor has to give just one application to the DP,” says Dhirendra Kumar, CEO of Value Research.

    I wrote to Mr.Dhirendra Kumar yesterday on the above mentioning the same thing could be done offline too just by updating KYC once. There is no need to go to different houses as mentioned by him.

    I’m still awaiting his response.

    Some more points worth considering are:

    1)To obtain consolidated account statement, even now, if you want, you can visit http://www.camsonline.com – Online services for Investors- Mailback Services- Consolidated Account Statement –CAMS+Karvy+FTAMIL – to obtain what NSDL is promising as you would get by demating the demated units. Unlike demat, this comes at zero cost.

    2)The consolidated account statement that is being implemented by SEBI would provide you the details of all your holdings. Since your PAN would be the key for providing such consolidated holdings, you would be able to get single statement for investments made even through different advisors.

    3)Every stock broker insist on opening a separate demat account through them. Though this is not legally compulsory, a stock broker, for all practical purposes would not facilitate a transaction unless you open a demat account through him. So whenever you want to change your broker, you would end up having one more demat account. Multiple demat accounts defeats the very purpose of consolidation. The consolidated statement which is mentioned in above point would not happen if you’ve multiple stock brokers.

    3)Again though it is not legally compulsory, a stock broker normally insist on a power of attorney (POA) to be signed by you authorizing him to buy or sell on your behalf. All of us know about instances of POA being misused.

    4)When you go through an advisor, you also have direct relationship to mutual fund house in addition to advisor. This is not possible when you go through a stock broker. For example, if you want to invest in a mutual fund through a broker, the cheque needs to be written in his name and not in the name of fund. The funds would be purchased by the broker in his name in a pool account and then credited to your individual account. Any inefficiency in this process may have impact on your dividend receipt etc. What if he fails to credit to your individual account from his pool and you do not notice or reconcile it?

    5)Since you cease to have relationship with a mutual fund once you go through a broker, if you want to redeem your units, you cannot bypass your broker. You’ve to only redeem through him by paying brokerage. However you can always bypass an advisor and directly go to fund house for redemption, if the advisor refuses to service you.

    6)Since many of you opt for SIP route for building long term wealth, at present SIP is not possible through a broker. Once it becomes possible too, you may end up paying brokerage every month for every single SIP.

    7)If you invest through broker in the name of four individuals in your family, you need to have 4 different demat accounts. Every time you change your broker, 4 more new sets of accounts needs to be opened.

    8)If you make investment in 5 schemes now, each scheme can have a different nominee. If you go through a broker, the nominee by default is the nominee of your demat account. If you want different nominees for different schemes, you may have to open multiple demat accounts each with a separate nominee. So much so for consolidation!

    9)If someone tells you that your contact details can be changed for all schemes at one go through a broker’s demat, the same is possible by updating your KYC details only once through your advisor. The details get updated automatically in all your schemes, even if invested through multiple advisors. Again PAN is the key.

    10) A mutual fund is an investment product and is not a trading one. The nature of business of a typical stock broking firm is more aligned towards trading and not long term investing.

  2. Dear Muthu and subra sir

    Thanks for the views. would love to hear your take on the “fundsindia” / “fundssupermat” platforms considering all the above inputs.



  3. i need to clarify something: are demat holding charges based on the market value of the securities held? ie if i hold 1 lac worth of securities i’ll be charged X and 10x if i hold 10 lacs worth of securities (or some higher number). that would be a dealbreaker for many

  4. There is a very neat usecase for holding mutual fund in dmat form. You can buy mutual fund by submitting physical application form to a mutual fund sub-broker/advisor. The trail commission will go to sub-broker/advisor. Investor can hold this mutual fund units in dmat form so that he can sell it online without filling any physical form.

    The advantages :
    1. trail-commission goes to sub-broker/advisor and online broker websites will get only yearly account maintainance fee.
    2. Investor would never have to meet the advisor to sell the mutual funds.
    3. There are no paper documents to maintain.
    4. No need to inform change in permanent address to any organization.
    5. Online selling would be much faster than offline selling.

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