Discount Brokers vs. Full Service Brokers In India

DIVYA NAIR

05 Oct 2016

Brokers in india

Any transaction in stock market; be it buy or sell, requires a broker’s intervention who works like an agent between the market and market participants. Brokers are registered members of exchanges regulated by the Securities and Exchange Board of India (SEBI). Today, the retail brokerage business model is classified into two broad categories; full-service brokers and discount brokers. Before picking any type of broker, investors should first understand these two options by comparing the services and features, charges, minimum opening balance clauses etc.

Understanding Discount Brokers & Full-Service Brokers

Full-Service Brokers

Full-service brokers or traditional brokers are brokers who provide advisory and trading facilities in stocks, commodities and currencies. These brokers charge commission in percentage terms on the total amount of trade clients execute. Full-service brokers operate out of many offices and branches across the country, which clients can visit in case of any query. India Infoline is one of the leading full-service brokers in India.

Discount Brokers

These brokers came into existence as a result of increased preference for Internet. Discount brokers just provide a trading platform to investors but no advisory. Discount brokers charge low brokerage. 5paisa.com is one of the most competitive discount brokers in India. It offers trading experience in equity, derivatives, currencies and commodities at Rs 10/per trade (lowest in the industry), irrespective of the invested amount. Over the last few years, discount brokers have established themselves in the market and are giving a neck-to-neck competition to full-service brokers who have been in the industry for quite a long time.

Factors Full-Service Brokers Discount Brokers
Service Advisory for shares, mutual funds, bonds, currencies, commodities etc Provides trading platform
Brokerage Average daily brokerage is 0.3%-0.5% per trade Charge as low as Rs 10/trade, irrespective of the order value
Presence Operates through a number of branches Usually do not have much branches and provide online services
Suitable For An individual who seek hand-holding along with trading tools An individual who is well versed with market and can carry out own research
Deciding Parameters a) Brokerage & Other Charges
b) Research Desk
c) Customer Service
d) Leverages Funding
a) Brokerage
b) Cost of Transaction
c) Customer Support
d) Call & Trade Facility

Conclusion - The decision of choosing a brokerage house, be it a full-service or a discount broker, there is never a single perfect choice for every investor. Choosing between the two purely depends on personal needs and preferences. A new entrant in financial markets must consider the above mentioned parameters to take the best decision.

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Discount Brokers vs. Full Service Brokers In India

by Santosh Jayram | Oct 05, 2016
Brokers in india

Any transaction in stock market; be it buy or sell, requires a broker’s intervention who works like an agent between the market and market participants. Brokers are registered members of exchanges regulated by the Securities and Exchange Board of India (SEBI). Today, the retail brokerage business model is classified into two broad categories; full-service brokers and discount brokers. Before picking any type of broker, investors should first understand these two options by comparing the services and features, charges, minimum opening balance clauses etc.

Understanding Discount Brokers & Full-Service Brokers

Full-Service Brokers

Full-service brokers or traditional brokers are brokers who provide advisory and trading facilities in stocks, commodities and currencies. These brokers charge commission in percentage terms on the total amount of trade clients execute. Full-service brokers operate out of many offices and branches across the country, which clients can visit in case of any query. India Infoline is one of the leading full-service brokers in India.

Discount Brokers

These brokers came into existence as a result of increased preference for Internet. Discount brokers just provide a trading platform to investors but no advisory. Discount brokers charge low brokerage. 5paisa.com is one of the most competitive discount brokers in India. It offers trading experience in equity, derivatives, currencies and commodities at Rs 10/per trade (lowest in the industry), irrespective of the invested amount. Over the last few years, discount brokers have established themselves in the market and are giving a neck-to-neck competition to full-service brokers who have been in the industry for quite a long time.

Factors Full-Service Brokers Discount Brokers
Service Advisory for shares, mutual funds, bonds, currencies, commodities etc Provides trading platform
Brokerage Average daily brokerage is 0.3%-0.5% per trade Charge as low as Rs 10/trade, irrespective of the order value
Presence Operates through a number of branches Usually do not have much branches and provide online services
Suitable For An individual who seek hand-holding along with trading tools An individual who is well versed with market and can carry out own research
Deciding Parameters a) Brokerage & Other Charges
b) Research Desk
c) Customer Service
d) Leverages Funding
a) Brokerage
b) Cost of Transaction
c) Customer Support
d) Call & Trade Facility

Conclusion - The decision of choosing a brokerage house, be it a full-service or a discount broker, there is never a single perfect choice for every investor. Choosing between the two purely depends on personal needs and preferences. A new entrant in financial markets must consider the above mentioned parameters to take the best decision.

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