What Do DP Charges Mean?

The share market attracts old and young alike because of the many possibilities it offers. Every day, new participants join the share market to try their investing skills. Unlike other investments, investing in shares requires a wide range of research regularly. At the same time, it is important to know about the charges associated with share trading. Everyone is aware of the brokerage charges, however, there are other charges as well that a stock market investor must pay. In this article, we will explore all DP charges, which are associated with delivery trading.

Depository Participants - DP

The key intermediary that connects the stock market and the investors is a DP or Depository Participant. A DP can also be a stockbroker if it provides Demat & Trading account. E.g., Bajaj Financial Securities Limited is a DP as well as a stockbroker, it facilitates the buying and selling of stocks along with offering a Demat Account.

What are DP Charges?

The Depository Participant charges (DP Charges) are levied on the sell side of delivery orders in your demat and trading account. This is levied by the depository to which your stockbroker is registered. DP charges are different from brokerage fees. DP charges are applied per ISIN irrespective of the number of shares. This simply means that if you sell one specific stock multiple times a day, the DP charges would be levied only once for that day. However, if you are selling two stocks, A and B, the charges would be levied separately for each stock.

The DP charges for Bajaj Financial Securities Limited are ₹30 or 0.0002% of transaction value whichever is higher + applicable taxes.

Who levies DP charges?

Depository participant charges are levied by the depositories and the depository participant. These are charges levied on all sell transactions of delivery orders. Depending on the depository with which the broker is associated, DP charges will be collected.

Why are DP Charges levied?

DPs are registered to depositories like the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). The role of NSDL and CDSL is that maintains and secure the record of all your shares in the demat account. In simple terms, it is very similar to cloud storage, on a massive scale. To maintain this huge amount of data, the depositories charge the DPs a membership fee for every demat account that is opened and maintained. They also charge the DPs for other activities associated with the demat account, such as Dematerialization, Rematerialization, Pledging, Unpledging, Off-Market Transfer, etc. To maintain such costs, DPs charge their demat account holders. Thus, the DP charges are levied from the customers.

How much DP charges are levied?

The DP charges levied are different for different participants. The charges levied by Bajaj Financial Securities Limited are mentioned below:

The DP charges for BFSL are ₹30 or 0.0002% of transaction value whichever is higher + applicable taxes.

Usually, DP charges do not reflect on your contract note.

Can I avoid paying DP charges?

DP charges are collected by all stockbrokers on sell-side transactions. However, this is levied only in the case of delivery trades. While trading in intraday, derivatives (futures and options), and BTST, DP charges are not levied. The reason they are not levied is that there is no delivery of shares involved in it. So, if you do not want to pay DP charges, the only way to avoid it is by trading in other segments like Futures and Options. If you are investing in shares for the long term, then you must pay the DP charges.

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