There are different kinds of people who invest and trade in direct equities. There, of course, the equity and portfolio managers at banks and hedge funds managing billions. And then there are regular, everyday investors looking for a place to park their savings and make some money. Some want to make lots of money, trading in short-term cycles to make a quick buck, and others have a longterm horizon in mind, placing faith in the companies that they believe will succeed, giving their money the chance to survive any stock market volatility.
Whichever kind of investing you prefer to do, if you are an individual who wants to start purchasing direct equity, you will need a trading account and a DEMAT account. A DEMAT (Dematerialized) Account is essentially an electronic storage of all of your shares. It is to your shares what a bank account is to your money. A trading account, on the other hand, is necessary because it effectively gives you a broker's intervention, as individuals cannot directly go to a Stock Market and start buying a company's shares. So the broker acts as the intermediary between you and the market. Investors can only trade by opening a trading account with SEBI Registered Brokers (Securities and Exchange Board of India), the regulator for the securities market in India.
Traditionally, brokers have come in the form of Full Service brokers such as India Infoline, ICICI Direct and HDFC Securities. These companies provide both advisory and trading facilities in stocks, commodities and currencies and typically charge a percentage of the trade value as their fee.
You can have accounts with more than one stock broker, but sometimes this can lead to a scattering of important financial information, and people have increasing relied on technology (such as SimpleMoney to consolidate their portfolio in one place.
Over the past eight or so years, with the process of technology and a growing dissatisfaction with the existing brokerage model, there has been a growth of Discount or "Execution Only" Brokers whose core service offering is the ability to execute transactions using their (mostly) online platform. These brokers usually charge their fees as a transaction fee.
Discount Brokers are ideal for "DIY" investors because they often come without the advisory component. However, even though they might not have advisory services, they often have research tools that help users make investment decisions, and they have useful reporting systems.
Today in India, there is a plethora of discount broking platforms. While this post doesn't list all of them (because it would take a lot of time to do so), here's a look at some of the well-known platforms. If you think we've missed one, please write to us at [email protected].
5paisa is an Online Financial Services Provider. It is a trading and robo-advisory platform that also provides a host of other services such as Mutual Fund transactions and insurance schemes. It's backed by India Infoline, which is one of the country's largest Full Service brokerage firms.
Price: There is no easily accessible information on the website about the cost of opening an account, and what the fees are. Here's what the Chittorgarh website says:
Account Opening Fees & Annual maintenance charges (AMC)
Trading Account Opening Charges (One Time): Rs. 650
Trading Annual maintenance charges (AMC): Rs. 0
Demat Account Opening Charges (One Time): Rs. 0
Demat Account Annual Maintenance Charges (AMC): Rs. 400 per year
Stock Intra-day Trades: Rs. 10 per executed order (buy and sell are considered as 2 orders)
Stock Cash Delivery Based Trades: Rs. 10 per executed order
Stock F&O Trades: Rs. 10 per executed order
Currency F&O Trades:Rs. 10 per executed order
Fyers describes itself as a "technology-focused stockbroking firm." With three trading platforms (FYERS Web, FYERS One and FYERS markets), the company also provides classifications of stocks into "thematic investments" such as "Retail Shopping Stores" and "Kings of Hospitality," helping investors choose funds in their preferred sectors.
The pricing structure for Fyers is as below:
- Equity Delivery and Thematic Investing: free
- Equity intraday and Futures: ₹20 per executed order or 0.01%, whichever is lower
- Options, Call and Trade services, Admin Square Off Charges: ₹20 per executed order
- For NRIs: ₹100 per executed order (for all segments)
ProStocks calls itself "India's True Flat Flat Fee Broker." By opening a trading account with ProStocks, users can invest in Equity Cash, Equity Derivative, Currency Derivatives and Depository Services. They state on their website that they plan to start a mutual fund investment platform soon.
Price: ProStocks has a comprehensive pricing plan on its website, providing a choice of options based on how often you invest and trade:
Unlimited Monthly Plan: Unlimited Equity and Derivatives trading in an exchange for ₹899.
Flat Fee Plan: ₹15 per transaction, regardless of the value.
Unlimited Yearly Plan: Only flat fee, no brokerage on turnover. ₹8999 per year for Unlimited Equity and Equity Derivatives trading in an exchange; ₹4999 per year for Unlimited currency trading in an exchange.
Founded in 2015, [SAMCO] (https://www.samco.in/), acquired Samruddhi Stock Brokers and rebranded it to SAMCO securities. SAMCO provides in trading application as a downloadable program (for Windows only), a mobile app, and as a web-based service.
Price: SAMCO's pricing structure is very simple: ₹20 per executed order.
SAS Online, which calls itself "India's True Discount Broker," is an online discount brokerage firm offering brokerage services for stocks, future and options on NSE, BSE and MCX. The company uses its proprietary platform, Alpha, which provides services such as dynamic-market scanning tools, advanced order management and rapid transactions.
Account opening charges are as below:
- One time Trading + Demat Account opening charges are Rs. 400/- (inclusive of taxes) only (which includes NSE/BSE Equity, F&O, Currency Derivatives and NSDL Demat account)
- One time Account Opening charges for Commodity segment is Rs. 200/- (inclusive of taxes) only.
- Annual Maintenance charges are Rs. 200 + Service Tax for Demat Account.
- No AMC for Trading Account and Commodity Account.
For brokerage charges, SAS Online provides a few options:
- A fee of ₹9 per transaction for the equity, currency and commodity segments. For equity cash, the charge is 0.01% of the value of the trade or ₹9, whichever is lower. For deliver,it is 0.1% or ₹9, whichever is lower.
- Rs 999 MCX Plan for unlimited trading in commodities.
- Rs 999 unlimited monthly plan for unlimited trading in commodities.
- Rs 499 unlimited currency plan for unlimited trading in currency derivatives.
Tradejini provides investors with a platform to invest and trade in Cash Segments and Derivatives Segments across all major stock and commodity exchanges, providing both online and offline services. They also provide customised services to NRI investors.
Tradejini's pricing structure is a flat fee model, as follows:
- Futures - Equity, Currency and Commodity: ₹20 per executed order or 0.01% of Turnover whichever is lower
- Options - Equity and Currency: ₹20 per executed order
- Delivery - Equity: ₹20 per executed order or 0.1% of Turnover whichever is lower
- Intraday - Equity: ₹20 per executed order or 0.01% of Turnover whichever is lower
[Trade Smart Online], a venture by VNS Finance, is an online brokerage platform that has desktop, mobile and browser based trading platforms.
Pricing: Trade Smart Online has two pricing schemes:
- For Low Volume Traders: Value Plan - Intraday Cash, Futures, Currency, Commodities at 0.007%, Delivery at 0.07%, and Options at ₹7 per lot
- For Big Volume Traders: Power Plan - ₹15 per executed order, regardless of the size of the trade
Zerodha is probably the most well-recognized, and some would say pioneer, of the discount brokers in India today. The website states that the company has over 700,000 clients and that it accounts for 8% of the daily retail trading volumes across the NSE, BSE and the MCX.
Kite web is Zerodha's trading platform, providing market data and reporting tools.
To open an account, Zerodha charges ₹300 for a DEMAT account and ₹200 for a commodity account.
All equity delivery instruments (NSE, BSE) are free, with no brokerage charges. For intraday trades across equity, currency and commodity trades across NSE, BSE and MCX, the cost is either ₹20 or 0.01% of the trade, whichever is lower. Here is a list of their charges.
Need a place to track all those equities? Try SimpleMoney.