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Growth of discount brokers in India

Created on 23 May 2019

Wraps up in 3 Min

Read by 1.8k people

Updated on 10 Sep 2022

The discount brokerage has set up a totally new investment scenario in India. You would be surprised to know that plenty of first time investors are showing up due to the presence of discount brokers around. So, let us understand what discount brokerage is and what the benefits of opting for it.

Looking at the current needs and the changing trends of the stock market, the stock market brokerage is divided in to two categories, which are, discount brokers and full-time service brokers. The fee charged by discount brokers is very small as compared to full-service brokers. Sometimes these discount brokers may choose to give a small piece of advice here and there along with brokerage services to maintain their clientele. 

Discount brokerage refers to a brokerage firm or a stock broker who charges a reduced commission on enabling the buying and selling transaction of shares. A discount broker does not provide any help regarding which stocks to buy or sell and also does not offer any other advice on this matter. 

On the other hand, full-service brokers are traditional brokers who provide brokerage facilities along with advisory facilities. The full-service brokers are into full time advisory services and operate from multiple branches placed all over India. The commission charged by these brokers is a certain percentage of the total sum of money invested in the trading of stocks

Over the past few years, the discount brokerage has picked up good growth and is giving a tough fight to full-time brokerage services. Here is a quick comparison between discount brokers and full-time brokers to help you understand the differences between the two of them better.

 

S. No

Full-service brokers

Discount brokers

1

They provide advisory services for shares, bonds, and other financial commodities along with brokerage services.

They just help you access the trading platform to buy and sell shares.

2

The brokerage fee ranges from 0.3%-0.5% per trade.

They charge a fee as low as Rs. 10 per trade irrespective of the trade value.

3

They have many branches from where they operate.

They provide online services, usually.

4

They are suitable for those who are new to investment scenario and seek guidance for investing money.

They are suitable for those who can research on their own and only need trading services.

5

You need to consider reviews on the advisory and brokerage services. 

You need to only consider trading or brokerage support before appointing a discount broker.

 

Earlier, as the discount brokerage seeped into India, there was more number of conventional or traditional brokers, but, now most of them have turned themselves into internet discount brokers. One of the advantages, of appointing discount brokers is that they usually don’t offer advice, so they don’t push you to buy or sell anything. The second benefit is that most established discount brokers offer a lot of study material on their websites.

One of the things that you need to watch out for while dealing with discount brokers is that they may have some hidden charges. They may boast about their low fee initially but may later come up with an additional fee for mailing the details or issuing a stock certificate. Moreover, you must ensure that discount brokers have good customer support to offer. Any transactions that are carried out for you need to be communicated promptly to you, and you must be able to get-in-touch for any further follow-ups. 

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