SAT upholds Sebi order on DP transfer fees
The Securities Appellate Tribunal (SAT) on Friday upheld Sebi’s order directing the depositories and their participants not to levy transaction charges when an investor transfers his securities from one depository participant (DP) to another.
By TNN |
The Securities Appellate Tribunal (SAT) on Friday upheld Sebi’s order directing the depositories and their participants not to levy transaction charges when an investor transfers his securities from one depository participant (DP) to another.
In a move, that will benefit millions of investors, SAT dismissed National Securities Depository’s (NSDL) appeal against the Sebi order issued on January 28, ’05 rationalising the tariff structure.
Earlier, if an investor wanted to switch his demat account to another DP — within the same depository or to another depository — he had to pay a transaction fee. This meant that for closing his account with a participant or with a depository due to unsatisfactory service, the investor had to pay the fee levied by the depositories and their participants.
“Why should an investor pay for closing his account with a depository or its participant on account of unsatisfactory service?” the order asked.
The result was that an investor had to put up with a particular participant or even with a depository, no matter the service rendered to him was unsatisfactory because closing the account meant paying charges.
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This discouraged the investors to close their account and transfer their securities to other participants or depositories. “It is for this reason, the Board (Sebi) directed the depositories and their participants not to levy any charge when an investor closes his account and transfers his securities to another participant or even to another depository,” the order said.
“Sebi’s order will lead to competition among the depositories and their participants to compete with each other to render better service to their clients (investors),” the order explained.
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