Discount Brokers in India

With the increase in financial awareness and internet usage in India over past few years, more and more trading is being done online. Many investors are looking for saving their transactional costs. This has given rise to the concept of Discount brokers. Discount brokers offer very competitive brokerage rates as compared to traditional full service brokers.

What are Discount Brokers?

The discount broking is a concept where a broker charges relatively lower commissions as compared to market norms and attract the existing clients of other firms in the field. They usually offer their services online to keep their costs low. Discount brokers do not charge an annual service fee or maintenance fees which typically cost up to Rs. 300 to Rs. 1000 in case of full service brokers.

Discount Brokers in India

Discount broking is a very recent trend that started just five years back in 2010. Discount brokers charge a reduced commission and do not provide investments advice. The best known discounts brokers in India are Zerodha, RKSV and Tradejini; there are also few smaller players in the market as well, but based on the revenues these three are the largest. Charges are kept low because discount brokers have fewer employees, fewer products, and no advisory teams. Lately, discount brokerage is becoming very popular in India as more and more people have access to internet and several people are now investing using their own knowledge.

Advantages and Disadvantages of the Discount Broker

Working with a discount broker can provide cheaper access to investments. This can lead to bigger profits and better decisions.

 

Pros

·    The main advantage of trading with a discount broker is that, investor can save lot of money on transactions. While investing with a full-service broker, investors have to much higher amount of money as commission, which could be a flat fee or based on the trading volume. If you trade frequently then these commissions can add up quickly to a large amount. Brokerage charges of the mainstream brokers are in the range of 0.2% to o.55% per Buy and Sell transaction, and thus it translates to huge amount if your trading volume is high.

·    Discount brokers operate in a more transparent manner. Discount brokers offer a trading platform for their customers to make the trades of their choice. They don’t offer advice and guidance and are there typically to facilitate the transactions their customers wish to make. Discount brokers rely on offering a quality, efficient service that enables their customers to buy and sell financial instruments (shares and mutual funds) easily.

Cons

·    By using a discount broker, you do lose out on the advice you are entitled to when using a full-service brokerage. However, several online discount brokers have a variety of trading and researching tools which can, in part, offset this disadvantage.

·    With a discount broker, you might also risk giving up some features and services that you would be able to get from a full-service brokerage. With a discount broker, you might not be able to invest in as many different types of securities as with a traditional broker. Most of them are only going to focus on the most popular types of securities. This is going to restrict your options and you may have to use multiple brokers for doing transactions in different financial products.

Major Indian Discount Brokers

Find the list of top discount brokers in India below and choose the best discount broker in India. Most of these are online discount brokers in India and thus provide trading facilities over the internet.

Broker Name	Account Opening Charges	Brokerage
Zerodha	Rs. 200	Free equity & direct mutual fund investments. Flat ₹20 on all intraday, F&O, currency, and commodity trades across NSE, BSE, MCX
RKSV Security	Zero for ISB readers	Free delivery trades, Flat Rs. 20 on all intraday, F&O, currency, and commodity trades across NSE, BSE, MCX
SAS Online	Rs 400	Flat fee of Rs 9 per executed order whenever you trade across equity, commodity or currency segment. For Equity cash 0.01% or Rs 9 whichever is lower for intraday and 0.1% or Rs 9 whichever is lower for delivery
TradeJini	Rs 300	For F&O and Intraday- Rs. 20 per executed order or 0.01% of Turnover whichever is lower For Delivery, Rs. 20 per executed order or 0.1% of Turnover whichever is lower
Trade Smart Online	Rs 400	0.007% for small volumes or Pay maximum of Rs 15 per order or Rs. 1999 per month for unlimited trading
Wisdom Capital	Free	0.00% in all NSE, BSE for FNO and MCX all segments, Multiple plans – Freedom, Pro and Ultimate plans available

How to Choose a Discount Broker

·    Rates
Many of the adverts that you will see for discount brokers focus on the price-per-trade. Choose a discount broker that provides lowest price-per-trade.

·    Other fees
Beyond the price-per-trade, you will find that brokers may charge other fees, including fees for closing an account, fees for transferring assets into the account, IRA custodian fees, account inactivity fees, wire transfer fees, annual fees and charges for not maintaining a minimum required balance.

·   Customer service
It’s important to know the kind of customer care service that the brokerage offers. You should ensure that, your broker is easily accessible over phone, email and online chat for answering your queries and provide support.

·    Investment products offered
All discount brokers will offer stocks on the major exchanges although choices such as government bonds, options, corporate bonds, and the like are not available through every brokerage. Determine your broker based on your investment needs.

To summarize, it is necessary for investors to be aware about various low-cost brokerage plans available in India to minimize their trading costs. Remember that, if you trade frequently then having discount broker will help you save lot of money which you will otherwise spend on brokerage cost with traditional full-service broker.