My sub-broker was suggesting that I leave my shares with the broker instead of transferring into my demat account. Is that fine?

Many customers leave shares with the broker so that they can leverage the value of these shares to take positions in F&O. The risk is that if you incur losses in F&O and you cannot pay the margin call, then the broker will sell off these shares on your behalf. We always suggest that once you buy the shares make it a point that these shares come into your demat account.

There is one more practice you must totally avoid. For example, some investors sign the debit instruction slip (DIS) and leave it with their brokers so that they can fill up and submit when the shares are sold. That is something you must never do. It is a recipe to encourage frauds and other such activities and hence you must totally avoid such techniques.