What is a CDS account for NSE trading?

How do you open a CDS account?

If you have chosen a provider, you can now open the securities account . If you already have a current account with a direct bank and would also like to have the depot activated, you usually do not have to prove your identity again. As a new customer, however, you cannot avoid a few details.

The custodian bank asks for data such as address, account details or salary . The EU directive Mifid-II, which has been in force since 2018, also requires that every new customer enter their previous experience with securities on a scale. If you later buy securities that exceed your stored knowledge, the bank or broker would issue a warning.

Finally, proof of identity is required. This is now often done using the videoident procedure, i.e. a short video call using a smartphone, tablet or laptop. A special call center checks your ID, which you have to hold up to the camera. Most banks offer the Postident procedure as an alternative. You will receive an application to open a depot, which you take to a post office counter, where you identify yourself. The depot provider checks the documents and only then activates the depot. It may take a week or two before you can use your depot. In exceptional cases, such as the first corona lockdown in spring 2020, the waiting times were sometimes even longer.

First steps in the new depot

Your bank or broker will let you know as soon as the new custody account has been set up. You can then transfer money from your checking account to the clearing account with a normal transfer (this step may not be necessary with direct banks if it is the same account). And off you go – you can set up a savings plan or buy ETF shares.

How do you change your CDS account?

If you want to change your depot provider, this is relatively easy. To do this, first open a new account with another bank or another broker. Most banks offer a relocation service (custody change service) . To do this, you fill out a form that authorizes the new bank to transfer the securities from your old custody account. Before that you have to delete open orders and, if there are any, sell fragments (i.e. the fractional parts from a savings plan).

You can also select individual stocks or funds for a transfer. Check beforehand whether the securities can also be traded with the new custody account provider – otherwise a transfer would be neither possible nor sensible. Transfers to direct banks and from well-known individual stocks and large ETFs are usually unproblematic. Before the transfer, however, you should check whether a security can be traded with the new provider. If this is not possible, then it cannot be transferred. If in doubt, customer service can help you.

However, the providers may pass on the costs of third parties, such as custodians, to you.

A depot change can take several weeks. During this time you sometimes cannot access your securities. You should therefore not transfer securities that you intend to sell in the near future.

The supervisory authority Bafin expects that an intra-German securities account transfer will be processed “immediately” and will not take longer than three weeks. If it doesn’t work within this time, the bank you have commissioned must at least say what the problem is. How to proceed step by step when transferring a securities account and what you can do in the event of problems is explained in the guide to changing securities accounts.