Alright. Thanks Yogesh.
One last query, does all demat service providers give SPEED-E facility & what all transactions could be done on SPEED- E platform?
If you do know about this particularly, does Kotak Mahindra Bank demat service provides SPEED-E ?
Take a look at link below
https://eservices.nsdl.com/SecureWeb/speedehtmls/DP.jsp?serv=SPEEDe
Do check if your DP Id is in this list as banks have multiple DP id and not all of them are available for SPEED-e. Best way is to ask your broker if they offer speed-e for your DP id. My guess is if your demat is linked to your online trading with POA then SPEED-e is not available. SPEED-e is just an alternative to paper delivery instruction slips used in offline trading.
Check the FAQ on speed-e https://eservices.nsdl.com/SecureWeb/Faqs.html
Zerodhaâs feedback Form, incase you wish to suggest any additions/ modifications.
Does Zerodha provide Online transfer of securities called Easiest in CDSL to his/her customers?
I have generally seen brokers are not interested in providing Speed-e/Easiest online facility to the customers.
Also most of the brokers except banks are not able to provide 3-in-1 accounts.
I think with technology it should be possible for all brokers to provide 3-in-1 accounts and any trading account should interconnect with any demat and bank account.
Present systems is against the spirit of Easy of Doing business.
The reason brokers arenât too excited about Easiest is because it raises the risk of short delivery greatly. Selling a share and then transferring the same out of the demat on the same account is possible since the broker has no means of blocking the shares youâve sold. Once this is addressed, it should catch on.
Hi @Nikhil.A
I has a conversation with the person in-charge of Easiest at CDSL on 022-22728648. She told me once shares are sold same can be blocked in the demat account. This facility has been provided specifically to help broker prevent the situation you have mentioned.
I can tell you ICICIDirect does block the shares in demat once sold.
Can you clarify on this?
Thanks
Also @Nikhil.A
Look at point 3 in the email reply below. I could not understand, what is the person trying to convey.
Also see the registration process for Easiest on the website of CDSL.
ICICIDirect does not allow access to SPEED-e for their 3-in-1 accounts. They offer e-instructions which is similar to SPEED-e but it is their own system so they have control over it.
Another reason brokers arenât too exited about Easiest or SPEED-e is that these portals allow clients a backdoor access to the demat account. Clients can transfer shares out of their demat using these facilities. Brokers will have to check demat balance and lock the ISIN amount before accepting or modifying a sell order. This might delay order processing. Brokers on the other hand are moving towards faster high-frequency trading so they arenât thrilled about this additional step.
Hi @Yogesh_s
I have talked to CDSL, they said a facility known as Locked for trade has been provided to Depository Participant. Once an order is placed by the client, those shares are locked and cannot be transferred using Easiest/Speed-e facility.
As far as checking the demat account before placing the order by Depository Participant(DP) is concerned it has to be done by computer and not manually and can be very easily done with few line of code and within few milli seconds.
Not providing this facility is just a way of Depository participant/brokers to lock in the customers like you and me, preventing us from moving our own securities to other accounts. This is win-lose situation where investors lose and broker/depository participant win.
Your efforts for talking to CDSL and uncovering this facility is well appreciated.
Brokers are trying to shave that few milliseconds of order processing time as world over API based HFT is gaining momentum. Trading speed is how a broker getâs the edge.
For investors, I think no one should sign a POA for their demat account where they hold their long term investments. Itâs like keeping all your gold in the jewelerâs vault and giving the key of the vault to the jeweler just so that the jeweler can let you sell your gold online in fraction of a second. to me thatâs dangerous. Jeweler will say that he is authorized to use the key only to settle your trade and nothing else. There is no way you can enforce that and general law enforcement is weak in our country.
With the arrangement I have described in post 110, you can keep your long term holdings safe in a standalone demat account without POA (not linked to an online trading account) with a big bank and transfer shares to your broker demat on T-1 day using SPEED-e or Easiest or any other facility provided by your bank DP. e.g. ICICI provides their own facility called e-instructions for this. You have to plan your sell 1 to 2 days in advance. If you are a long term investor, this delay of 1 to 2 days is insignificant. Your demat account with the big bank will let you use SPEED-e or Easiest where you can freeze the demat for debit.
Point is, even if the broker does not allow access to Easiest, it doesnât matter because you shouldnât leave your investments with the broker in the first place.
I agree with you @Yogesh_s my efforts are continuation and furtherance of scheme you suggested. Now let me throw this at you
Let us say you plan to sale a security and therefore you transfer the same from your non-POA demat account to your POA account but later for some reason (and there can be many, and it has happened to me several time) you change you plan and you do not wish to sale. How would you again transfer your securities from your POA account to non-POA account?
I hope you would want to keep your options open and have Easiest/Speed-e on your POA account also.
I can tell your all brokers/depository participant and together in this. I have a personal belief that this system of POA is a systemic risk to Indian Stock market, which can play out very ugle in a black swan event and regulator should develop a technological solution where securities should automatically be transferred from demat account once a transaction is authorized by stock exchange without any intervention from broker/depository participant what-so-ever.
IMO, POA in itself is not a risk but the way instructions are exchanged through a trading terminal which doesnât leave any proof with us in case of any issues later. @Nikhil.A assured that there is some mechanism in place but Iâm not so sure of the applicability and enforceability of the same.
Can you elaborate more why do you think POA is not risk?
I feel in any case any litigation or going to court is an additional burden on investors particularly small investors and the system should be designed in such a way that the scope of litigation is zero.
I hope you must be tracking NSEL case. How long does it take to resolve a case in this country?
You can use the paper route (Delivery Instruction Slip) for this. I know itâs cumbersome and not very 21st century but thatâs an option. Even a discount broker will charge 0.03% for this. Other option is to sell and buy back. when you buy back, shares should get delivered your holding demat (as per my scheme). This option is not very practical as it involves unnecessary transactions and costs but a possible option.
Having Easiest facility will be good in this case. Alternatively DPâs should really provide an online facility of their own to transfer shares. Itâs like a bank providing internet banking for their saving account.
On a different note, I am actually trying to make trading a little difficult as it allows me time to think before execution. If trading is too easy and cheap, you end up with too much trading and for long term investorâs its not good.
Even in the offline trading, that is without POA, one can only trade through broker which serves as an intermediary as per the current system which happens through instruction slips. Itâs relatively safer because we would have the receipt of the instruction slip in case something goes wrong. In case of POA, which empowers brokers to trade online on behalf of the clients, the risk arises because we as clients are not left with any proof that we initiated such and such transactions and its all good and even the trading terminals are not error proof. Iâm not even sure why brokers need POA for online trading and not for offline trading. The only plausible answer through common sense is that brokers generally and collectively do what is convenient for them. Iâve raised this issue earlier above, you may go through the same.
Of course, Iâm aware of not only NSEL but many other cases and have first hand direct experience with our legal system and bureaucracy in general which is pathetic to say the least so much so that if commoners get to know the same in detail they will totally lose the faith in the system and may get into depression. But whatâs the way out?
I believe @Yogesh_s @cool_aksh you will agree that we need
I. A technology based solution where PoA is not given to broker/depository participant.
II. Demat account holder must have an internet banking equivalent internet interface for demat account and s/he should be at full liberty to move his securities to any demat account.
III. An investor/client should have an option of choosing any bank, trading or demat account provider and all the three accounts should interconnect seamlessly.
IV. Demat account, trading account and bank account should have interconnection where an order place by client and authorized by stock exchange should lead to simultaneous debit/credit of all account even if service provider of all the three accounts are different.
This has multiple advantages for demat account holders, investors, regulators and Government.
@Yogesh_s Thanks for sharing your setup. Can one can use Speed-E to transfer shares to a CDSL Demat account or does it allow transfers only to NSDL demat accounts?
Hi @Nikhil.A
Information provided by you below is incorrect
Please have a look at Communique no. 5844 , they have in fact provided Locked for trade facility long time back.
DP-5844-Release-of-New-Functionality-Earmarking-of-Securities.pdf (457.1 KB)
Yes you can transfer to CDSL demat account as well.
I do agree that we need some of the features that you listed, few can be termed as wants rather than needs. We are forever pushing the frontier of needs vs wants so sooner than later these wants will become needs.
I am actually not as critical of the brokerage industry as you appear to be. Especially, the discount brokerage has taken care of the issue that hurts the most, trading costs. First they switched from % of trade to per order costs and now they even drove that down to 0 (thanks to all the day traders, investors get a free ride).
