When we have to sell/buy stocks we need a broker. He is the link between stock exchange and investor/trader. Most of the investors and few traders are confused which retail broker’s services they should take full-service brokers or discount brokers in context of an overview of Indian stock market.
Let us analyze both types of retail brokers on various parameters and try to figure which services suit best.
Personalize Local Services – They have a good network of branches and franchise set up across India. They offer personalized services to their clients. Clients can visit them at their branches and franchise
Must Read: How to choose the right stock broker?
Number of Retail Brokers – There are more than 10,000 retail brokers in India. Nearly 500 or so have scaled down their operation because of stiff competition from discount brokers.
Add-on Services – They provide many add-on services like margin money, research reports, taxations, advising, and much more.
Account type – For transaction without hic-cups they offer 3 – in – 1 services like a bank account, trading account, and demat account.
Brokerage Charges – Many charges on basis of percentage of trade total trade volume. There is not much transparency as far as terms of charges are concerned, and are negotiable. The pre-paid plan is offered by some brokers.
AMC – Many a brokerage have annual maintenance charge.
Brokerage charges – They charge minimum brokerage.
Call & trade – It is free with most brokers.
Penny stock trading – Since they charge minimum brokerage, hence expensive.
Software charges – For using trading terminal most of the brokers charge extra to the retail investor.
Funding – Many of the broker offer funds for trading.
Margin money – Based on the personal relationship with the client they offer higher margin.
Investment options – They have many options like IPO’s, shares, commodities, forex, MF, FD’s, bonds insurance etc. Virtually in all area of the security business.
Target customers – Their main clients are those who need help on stock tips, diversification of portfolios for right asset allocation, managing their portfolio etc.
Focus – Because on the stiff competition they are focusing more on advisory services.
Examples – SBICAP Securities, ICICI Securities, HDFC Securities, Kotak Securities, Angel Broking, India Infoline, Motilal Oswal, IIFL, Sharekhan, Bonanza, Bajaj Capital, India bulls, SMC Global Securities, etc.
Personalize Local Services – Very few or no branches or franchise and that too mostly in metros. They are mostly online brokers. Do not offer personalized services. No frills brokers.
Number of Retail Brokers – Since this is a virtually new type of brokers who started their operations in 2010 they are very less in numbers. But being less in numbers they account for nearly 10-15 percent of the transaction.
Add-on Services – They do not offer research, funding, taxation, advising. No frills services. They are mostly focused on benefits of intraday trading.
Account type – They do not offer demat or bank account. Only pure trading services are offered.
Brokerage Charges – Very cheap commission charges. Many of them charge flat brokerage that is on per trade basis. Some charge on monthly basis, for unlimited equity trading.
AMC – There is no annual maintenance charge since they do not hold any securities for the trading account.
Brokerage charges – Help trading in small quantity. No minimum brokerage charge.
Call & trade – Additional fee for call and trade services.
Penny stock trading – Since brokerage is mostly 0.01 percentage or nil for equity intraday hence good for penny stocks.
Software charges – Trading platforms like a website, mobile application and trading terminals are free.
Funding – They do not provide funding to clients.
Margin money – They offer standard margin money and is same for all clients.
Target customers – Mostly those traders who are looking for low-cost execution of their trade and who trade very frequently.
Focus – Fees are kept very low because they offer fewer products. They try to keep their operational cost as low as possible. They are more volume oriented.
Examples – Zerodha, SAMCO, RKSV Securities, My Value Trade, TradeJini Financial Services, SAS Online, Trade Smart Online, Trade Plus, Wisdom Capital, Fyers, etc.
It is possible to make good money in Indian stock market. Once you have decided your broker let us move forward.
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