Central Depositories 

There are two central depositories in India- 

• National Securities Depository Limited (NSDL) 

• Central Depository Securities Limited (CSDL)

These depositories offer financial services like transmission of securities, dematerialisation, brokerage account opening, settlements, depository services, educational initiatives to investors and others.

Depository Participant (DP)

A Depository Participant is a mediator between central depositories, NDSL or CDSL, and investors. A DP can be registered with any of these two central depositories. A bank, stock brokerage firms and financial institutions can be a depository participant. 

DPs render financial services on behalf of the central depositories. They need to pay a membership fee to get registered with them, post which they can provide demat account facility to investors. They pass on these charges to the investors registered with them for demat account facilities with some nominal fee. 

Depository Participant Charges

There are various charges levied by central Depositories on depository participants. Some of these are Account Maintenance, Demat charge, Remat charge, Transaction (Debit), Pledge Creation and confirmation fee, Pledge Invocation fee, failed transaction charges, etc. 

Demat transaction charges levied by Central Depositories on DPs for all sell transaction made are different for different DPs. For some DPs - 

• Transaction (Debit) Charges By CSDL:  BSDA HOLDING VALUE <=RS. 50000/- RS. 50 OR 0.05% (WHICHEVER IS HIGHER)  

• Per debit instruction in a Client’s account By NSDL: Rs.5 

And all these charges will pass on to clients by Depository Participant in the form of DP charges. It may vary from DP to DP depending on the demat account services they provide. 

• It is the revenue source for Depository Participants. 

• Most DPs charge a flat fee per sale transaction that remains the same irrespective of the number of securities you want to sell. 

Types of DP Charges

Depository Participant levy four kinds of DP charges for their services. These charges are mentioned as below: 

• Demat Account Opening Fee

Nowadays the opening process of a Demat account has become so easy that it can open within 10 minutes. The charges are either Zero or Discounted. Investors can open demat and trading account or a 3-in-1 account which includes a bank account, a demat account and a trading account. 

This facility makes stock investing easy. Demat and trading accounts make all the transactions involved in investing and trading seamless. 

• Annual Maintenance Fee 

Demat account holder will be charged an annual maintenance charge (AMC) for the services rendered by depository participants. As the account is maintained online, there is a backend team that always work for the betterment of the account and the platform. To maintain it, this charge is levied by the stockbroker to their customers.

Most DPs have waived off AMC for the first year of opening a demat account. While Some DPs charge AMC quarterly and others levy an economical lifetime fee. 

• Pledge Charges

For creation of pledge, that is to give the shares as collateral to raise capital, pledge charges are levied. As per the list of charges available on NSDL website, Rs.25 is charged per instruction for pledging. 

• Demat Transaction Charges

Your Depository Participant (DP) will charge the transaction fees when you buy or sell the financial securities that you own in your demat account. These are known as demat transaction charges. Some DPs charge on the credit transaction also.

• Demat Charge 

Demat full form is dematerialisation i.e. conversion of shares into the electronic form from a physical form. DPs charge a Demat fee if you have shares certificates in paper form and you want to sell them. Because for share trading, you need to convert it into electronic form first. 

Thus, the charges of stockbrokers for their services depend on the charges and taxes levied by the CSDL and NDSL.