Selecting a broker

[Amit009]

@Yogesh_s

I have found an alternative to custodian and DIS. Here is how it works

1. Open demat account without POA in a too-big-to-fail bank like HDFC.
2. open a trading account and demat account (with POA) with a discount broker .
3. Broker will deliver all BUY orders to HDFC demat
4. At the time of selling, transfer shares from HDFC demat to broker demat using SPEED-e.
5. Sell using discount broker.

With this arrangement, you can freeze your account using SPEED-e and only unfreeze the ISIN that you want to sell. That’s an additional level of safety. Also a large bank has a history of keeping safe custody of assets so I am assuming it is safer than a broker (brokers will disagree with this statement).

Hi Yogesh @Yogesh_s , I like this approach. A quick question:

Step 3: Will broker first deliver all BUY orders to broker demat accout (with POA) and then I have to transfer shares to non-POA demat account (Ex HDFC)?
Can you please explain a bit more how you handle this.

Also, how do you manage freezing your account using SPEED-e and unfreeze ISIN? Does this happen at non-POA demat account or NSDL/CDSL level?

Regards,
Amit

[Uservijay]

Did you try using a different bank account ? I have been using zerodha with Citibank and never faced any issue.

[Uservijay]

If we map discount broker with HDFC demat, all buy orders will go to it. But that was not the idea presented in step 2.
So, another option is to keep zerodha with its own demat and then use cdsl easiest to transfer to HDFC demat. We just need to make sure we open HDFC demat with CDSL.

[jprasun]

Hi Amit,
I have implemented what @yogesh_s has suggested. Have a look at my previous post here

To answer your questions:
a. The broker can deliver all buy orders directly to your non-POA third party demat account. You don’t have to make the transfer manually. Zerodha delivers my purchases to my non-POA HDFC demat account directly instead of my Zerodha POA demat account.
b. The freeze/unfreeze option is available for token based Speed-E. It doesn’t happen at non-POA demat account level but at the NSDL level.

Let me know if you have any queries.

[Amit009]

Thanks @jprasun for sharing details. I somehow missed your earlier post. It’s very informative!

Regards,
Amit

[Uservijay]

CDSL offers TRUST application which requires us (BO) to respond to SMS for debit instructions. This can add additional layer of security.

[samir_brd]

My broker, SAS online, used to allow me to trade futures, with the entire margin being in collateral of other stocks and liquid bees.

A couple of days back, they suddenly have started a new rule which states that only 50% of the margin can constitute of collateral, and the other 50% has to be cash. They claim that this is exchange mandated. Is this true? Have others faced a similar issue?

Since the Zerodha guys are active on the forum, I would like to ask them this question too. If I need f&o margin of 1 lakh, can it be constituted entirely from collateral, or do I need to hold part of the margin in cash in my client account?

[Nikhil.A]

@samir_brd

Since the Zerodha guys are active on the forum, I would like to ask them this question too. If I need f&o margin of 1 lakh, can it be constituted entirely from collateral, or do I need to hold part of the margin in cash in my client account?

You need to have 50% of the margin required for your overnight positions available as cash in your account. For intraday positions, you can use the entire amount since the reporting to the exchange only happens on an end of day basis. Any shortfall is reported to the exchanges by your broker and the shortfall is charged an interest as a penalty. More here.

@samir_brd

My broker, SAS online, used to allow me to trade futures, with the entire margin being in collateral of other stocks and liquid bees.

Not sure how they’ve been allowing this before, but the exchange regulations are quite clear about the client requiring 50% cash for overnight positions.

[samir_brd]

Thanks for your reply, Nikhil.

Now, I just saw the Zerodha documents, and apparently, instead of cash, I can hold liquid bees to fulfil the requirement of cash, is that correct?

Regards
Samir

[Nikhil.A]

That’s right. Liquidbees are treated as a cash equivalent at Zerodha. Can’t comment on other brokers’ policies though.

@samir_brd

liquid bees to fulfil the requirement of cash

This part warrants a little more clarification on my part. Margin obtained from pledging Liquidbees is cash equivalent.

[vnikam]

I am using religare since last 4 years and it is working fine most of the time. Although my usage is limited to Investing(delivaries)

[drgrudge]

My current trade setup:

1. All buying through Zerodha. Only trading account and no demat opened with them.
2. Shares get delivered to my HDFC Demat.
3. Selling through HDFC.

I wish to share my experience with Zerodha.

After submitting all the documents and signing the forms, it took almost two weeks for Zerodha to open an account. That too only after multiple phone calls and escalation to complaints[at]zerodha.com. When I commented in their Z-connect blog post, it was put for “moderation.”

Finally when the account was opened and when I started trading, my shares didn’t deliver to my demat on T+3 days. Called support but it was not helpful. Later when I checked my back office, the beneficiary ID of my demat was a 16 digit number (actually it was DP ID+CLient ID number). Had to escalate to complaints[at]zerodha.com and call support to rectify the issue.

I feel the support and other back end ends to be improved for Zerodha. I would recommend them for a trading account as a backup and have a demat in a big DP like SBI/HDFC. Only Zerodha might not be prudent as there were issues while login when Bangalore had floods, Brexit, election results, etc.

[samir_brd]

Really, your ideal setup would be this:

Have a demat account at Zerodha (or any other low cost broker) and at HDFC (or any other DP like ICICI)

Zerodha or other low cost brokers will generally transfer shares from their DP to HDFC based on a simple email.

For HDFC, register with Speed-E, with your Zerodha DP as one of your three designated DPs. Opening a Speed-E account is simple. If your DP is ICICI, ICICI has an even simpler e-instruction form.

After buying, transfer shares from your Zerodha DP to your HDFC DP. For selling, transfer shares from HDFC DP to Zerodha DP, and sell the next working day from Zerodha.

This way, you will enjoy low cost brokerage throughout (i.e., selling and buying), without any hassle of delivery slips etc, and still not face the risk of having your stocks in your Zerodha DP (no reflection on Zerodha-from all I know, they are extremely professional and well capitalized and unlikely to screw you), in case you wish to hold your stocks in a DP where you don’t trade and which is unlikely to go bust.

[Uservijay]

@samir_brd

Have a demat account at Zerodha (or any other low cost broker) and at HDFC (or any other DP like ICICI)

Don’t we need to have ICICI or HDFC demat with CDSL? I think inter depository transfers are not available on CDSL easiest.

@samir_brd

Zerodha or other low cost brokers will generally transfer shares from their DP to HDFC based on a simple email.

Without a physical DIS?

[hack2abi]

Many here have felt that their DEMAT a/c with TBTF banks are relatively safer than smaller brokerage houses. A counter-point to this thesis is, it is the Bank that is TBTF and not its subsidiary. The parent will not be liable for the wrongdoings of its subsidiary. That said, the professional management team does bring with it Risk and Control procedures, whether they are adequate to any entity, will only be judged during stressful black swan type events.

[samir_brd]

I think speed-E is an initiative of NSDL. So, from an ICICI or HDFC NSDL DP account, you can transfer stocks to a Zerodha DP account.

I don’t know about Zerodha. But my discount broker (SAS Online), will transfer shares to any pre-registered DP account from my SAS DP account on the basis of a simple email instruction from my registered mail ID. (No real security issues here, since the DP you are transferring stocks to is your own DP).

Regards

[somu0915]

Which brokers offer ‘Easiest’ facility from CDSL?

[tbhavesh]

All,

I am using Zerodha…can someone please help me how do i plot Fibonacci series in kite? I do not find its name in the studies dropdown? Checking if it is named differently in Zerodha kite? Thanks for your help and appologies in advance if this has been put in the wrong group.

Thanks,
Bhavesh

[Nikhil.A]

@tbhavesh

I am using Zerodha…can someone please help me how do i plot Fibonacci series in kite? I do not find its name in the studies dropdown? Checking if it is named differently in Zerodha kite? Thanks for your help and appologies in advance if this has been put in the wrong group.

The Fibonacci series can be plotted from the drawings dropdown.

[tbhavesh]

Thanks Nikhil. Appreciate your quick response