Transferring shares from broker to broker: which securities and how can be transferred?

It often happens that for some reason you decide to change your broker to another company, while you still have purchased shares.

The first thing that comes to mind is to sell the existing securities, transfer the money to another broker, and then buy the same shares from him.

But in this case, you will not only pay double commission and taxes on profits, but also risk losing dividends if such a transfer is made at the wrong time.

Therefore, there is another option that many professional investors use - to transfer their assets.

The process is carried out through a depository and typically takes up to ten business days. This should be taken into account when making your decision. During this time, you will be unable to make any transactions with your assets.

One important point is that transferring shares from one broker to another is a paid service. For example, in Revolut, the cost of transferring one position is $35.

As a result, for moving 10 AAPL shares, 7 NVDA shares, and 5 TSLA shares, you'll pay 3 x 35 = $105. It doesn't matter whether the shares are worth a dollar or a thousand dollars; you're paying for the position.

There are cases when a fee is charged not for a separate item, but for the entire package, for example, $50-100.

For this reason, it is not at all profitable to transfer small blocks of cheap shares, since the cost of transfer will be significant in addition to the value of the position itself.

How does the depository work when transferring shares?

The transfer itself is not carried out directly between brokers, but through a central depository, which maintains records of securities ownership. During the process, the depository debits shares from one broker's account and credits them to another, without changing the actual ownership of the securities.

This is why there are no tax implications when transferring assets, as there is no actual purchase or sale transaction—only the broker servicing your investment account changes. Just remember to obtain a certified purchase expense report from your previous broker.

Scheme for transferring shares from a broker to another broker

The procedure itself is quite simple, but there are still certain rules and a sequence of steps:

• Make sure the shares are transferable - they must be liquid shares (not OTC, not fractions, etc.).
• Open an account with the receiving broker and initiate the transfer procedure with them, transfer the BIC/ISIN of the account to the old broker
• Confirm the transfer of shares from a broker to another broker

After these steps, all you have to do is wait for the procedure to complete; as a rule, the transfer takes from 3 to 10 business days.

Transferring shares from one broker to another is a valid and legal tool that allows you to preserve your investments without selling assets, paying unnecessary fees, or risking losing dividends. However, such a transfer is primarily beneficial for fairly large and liquid positions, where the transfer fee doesn't significantly impact your portfolio's value.

Before making a decision, it's important to assess the cost of the transfer, the transaction lock-up period, and the portfolio composition in advance. In some cases, selling and repurchasing may indeed be simpler and cheaper, but for long-term investors, transferring through a depository often remains a more rational option.