Can One Person Have Multiple Demat Accounts?

One of the most common terms used while investing and trading in the stock markets is ‘demat account’. In this article, we will understand the meaning of this term and know if it is legal for one person to open multiple demat accounts.

A demat account is a primary requirement to operate in the Indian stock markets. This account is used to hold securities in an electronic or dematerialised form. The Securities and Exchange Board of India (SEBI) introduced demat accounts in India in the year 1996 and made it mandatory for any investor who wishes to invest or trade in the Indian stock markets.

Now the question that arises is can we have multiple demat accounts? Let’s find out.

Yes. In India, it is legal for one person to have multiple demat accounts. The SEBI does not have any limit on the number of demat accounts that can be held by a single person. However, you must know certain terms and conditions before opening multiple demat accounts.

• In India, opening multiple demat accounts is legal. However, you are not allowed to open multiple demat accounts or trading accounts with the same broker or depository participant (DP). So, if you already hold one demat account or a trading account with a broker or DP, you will not be allowed to open another demat account with them.

• Brokers levy annual maintenance charges (AMC) on demat accounts. You will have to pay the AMC charges even if your demat account is dormant and you have not made any transactions in the account. Hence, you must note that you will have to pay the AMC charge for each demat account if you hold multiple accounts.

Suggested Read: What Is A Depository Participant?

• Separate demat accounts for investment and trading:

  If you are both an investor and a trader, holding multiple demat accounts is beneficial for you. With multiple accounts, you can maintain your investment portfolio and trading portfolio in two different accounts.

• Access to a variety of services:

  Multiple demat accounts also offer the benefit of accessing different services from different brokers. Each broker’s service may vary from the other, giving you access to a variety of research reports, trading platforms, etc.

• Additional expenses:

  As we discussed earlier, each broker charges an AMC for a demat account, even if the account is inactive. Hence, holding multiple demat accounts may add to your expenses.

• Time Consuming:

  It is important for you as an investor to regularly monitor all the transactions carried out in your demat accounts. This might get difficult and time-consuming if you hold multiple demat accounts.

Holding multiple demat accounts in India is legal and is most beneficial for seasoned market players who can give enough time to track the activities in multiple accounts regularly. It is ideal to hold two different demat accounts for trading and investing. However, you must ensure that these accounts are being monitored regularly to avoid any fraudulent situations.

Suggested Read: SEBI Puts In Place Framework To Prevent Misuse Of Clients' Securities By Brokers