Why some brokers force you to open new demat accounts

Brokers in India are reluctant to allow investors to link their trading accounts with demat accounts held at other brokerages due to various challenges and risks involved. Lack of interoperability and standardization, shorter settlement times, and potential errors in the trading process are some of the reasons cited. Some brokers offer the option of linking a different demat account but restrict its use for buying and selling securities directly. Investors have the option of offline or online transfers for managing their demat accounts, each with its own advantages and costs. Online transfers through select brokers or through CDSL/NSDL provide simplicity and speed but have certain limitations. There is a need for standardized and cost-effective online inter-depository transfers to enhance customer convenience.

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