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What are DP charges in the stock market?

What are DP charges in the stock market?

When you receive your contract note, you must have noticed various charges like brokerage, STT and others being debited from your sale proceeds. But there is one charge that isn't visible on the contract note, but is nonetheless charged. We are referring to DP charge or depository participant charge. Wondering who a depository participant is and what is a DP charge? Well, you’ve come to the right place. In this article, we will understand everything about DP charges in the stock market.

What is a depository and who are depository participants?

Depository is an institution where your shares are safely stored. In India, the two main depositories are - National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL). While your securities are held for safekeeping with the depository, as an investor you cannot directly deal with NSDL and CDSL. Your broker acts as the intermediary or depository participant and connects you to the depository.

What are DP charges?

Depositories, in collaboration with the depository participant (broker) provide a wide range of services, including processing of corporate actions, pledging and unpledging of shares etc. In exchange for performing these functions, they charge a small fee known as DP charges. DP charges are applicable on only sell transactions and are directly posted on your ledger. DP charges are deducted once per scrip per day and are not dependent on the quantity of shares sold.

How much DP charges are levied in the stock market?

At m.Stock, ₹18 per debit transaction + GST will be charged as DP charges for sell transactions. Let us consider the following examples to understand this better:

  • Suppose you sell 100 shares of Tata Consultancy Services Ltd. when the market opens and another 75 in the afternoon. In this case, the total DP charges for TCS Ltd. will be ₹18 + ₹18 + 18% GST.

  • Suppose you sell 100 shares of Tata Consultancy Services Ltd. in the morning and 100 shares of Infosys Ltd. in the evening. Then, the total DP charges for the day will be ₹18 + 18% GST for TCS Ltd. and ₹18 + 18% GST for Infosys Ltd. This is because multiple different scrips are being sold.

DP charge is an unavoidable expenditure when you sell shares. But you do have a say in paying brokerage. Yes, open m.Stock’s Demat account and trade at flat ₹10 brokerage on all trades.

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FAQ

When evaluating a ₹10 brokerage broker, you must check whether the cost applies across segments. Also, check if any hidden charges exist. m.Stock charges ₹10 per executed order on all trades without any hidden charges. That is why m.Stock is a viable option for both active and passive investors. Order execution speed, availability of order type and product coverage are also to be reviewed before selecting any low-cost broker to be used on a regular basis.