Transferring Assets to Another Broker: Matching Instructions and What Happens to the Purchase Price

Assets move to a new broker not through a sale and repurchase but through a depository transfer: the securities change custodian while the owner stays the same. Technically, this involves matching instructions — a delivery instruction at the old broker's depository and a receipt instruction at the new broker's depository — which must agree on the issue, the quantity and the custody account details. The most valuable thing to take with you is not the securities themselves but the documents showing what you paid for them. Without these, the new broker cannot deduct your costs when you sell, and the tax will be calculated as if you had received the securities for free.

What can be transferred and what stays in the old account

Anything held in a depository can be transferred: a depository transfer works for shares, bonds, exchange-traded fund units and depositary receipts. Cash cannot be moved this way. Roubles and foreign currency are withdrawn by bank payment to your own account and then deposited with the new broker. Unsettled trades, margin positions with uncovered leverage, encumbered securities and assets whose records are frozen by restrictions cannot be transferred. The position has to be closed or the block lifted first.

Check fractional fund units and leftovers from corporate actions separately. Many depositories transfer only whole units, so any remainder has to be sold. This is more than a paperwork detail. It is the point at which your portfolio's structure quietly changes, even though all you did was switch brokers. If your portfolio follows a plan, compare it against that plan before submitting the instructions: your asset allocation should survive the move intact rather than be reshuffled by accident.

How it works: who moves what

Step 1: open an account with the new broker and obtain the custody account details: the account number, sub-account, depositor code and the name of the depository. Step 2: submit a receipt instruction to the new broker, which is usually filed as a request to accept incoming assets. Step 3: submit a delivery instruction to the old broker with the same details. The instructions are matched at the level of the higher-tier depository, which for Russian securities is the NSD, and the entries in both custody accounts change at the same time. If the details in the instructions differ by even one character, the transfer will fail, and it will fail quietly: you may still be charged for the attempt, and the notification may not arrive straight away.

Mismatched instructions are the main technical reason transfers fall through. For this reason, take the account details from an official statement or the new broker's depositor form, not from email correspondence.

Purchase price and tax

The tax base for securities transactions is defined as income minus documented expenses; the rules are set out in 13%. While the securities were held by the old broker, your expenses were confirmed by that broker's records. After the transfer, the new broker cannot see those records and must accept the data from you. You will need a statement of transactions, the broker's report on the purchase trades and the transfer document. Hand them over immediately rather than waiting until you sell: the broker must enter the purchase price into its records before it becomes the tax agent for your trade.

A depository transfer does not interrupt the holding period, so the long-term ownership tax exemption is not reset. However, you will once again have to prove the purchase date yourself, using the same documents. This is another reason to collect the statements before closing the old account: once the agreement is terminated, they are harder to obtain.

Individual investment account

An IIS is transferred as an account of its specific type, with its opening date preserved, and this is allowed only if you have a single active IIS. The deadline by which the old account must be closed after the new one is opened is limited by law and by the broker's rules. Check it in advance, because missing the deadline strips the account of its status entirely, along with the years of ownership it has accumulated.

When it is cheaper to sell and buy again

A transfer is not always the better option. Selling crystallises the financial result and creates a taxable event, but it spares you the paperwork. A transfer does not create a taxable event, but every depository charges for it, and it takes several business days during which the position is unavailable. For liquid securities such as blue-chip shares or OFZ, the loss on the spread is usually small, and selling and buying back is simpler. For fund units, securities with wide spreads and positions with large accumulated gains, a transfer is preferable: it preserves both the holding period and any unused losses on record.

What to check before submitting the instructions

Find out when the record date falls for your securities. If the transfer coincides with the date on which the list of shareholders is fixed, the payout may go to the old broker and reach you with a delay — check the dividend calendar. Make sure you owe the old broker no outstanding fees: if there is a debt, the delivery instruction will not be executed. Request a custody account statement before and after the transfer. Reconciling the issues and quantities against it takes minutes and catches almost every error.

What this article does not cover

Transfer fees, processing times and the list of supported asset types vary from broker to broker and from depository to depository, and this site does not hold that data. It must be taken from the current fee schedules and rules of the specific parties involved. This article describes the mechanism, not a price list. The terms used in the text are explained in the glossary.