Traditionally in India share brokers used to charge a certain percentage value of trade(for ex. ICICIdirect charges .5% for delivery based trading) . So if you were a trader or a large investor, you ended up paying a huge brokerage on your transaction. Most of the trader and large investor ended up paying brokerage worth lakhs of rupees. These type of brokers are know as traditional or full service brokers. Most of the retail investor were also using them for trading needs as these brokers where mostly linked with your bank like ICICIdirect with ICICI bank and it was very easy to open and manage account with them.
But in last few years, with the advancement in technology, there is a new breed of brokers available in Indian market which are called Flat fee or discount brokers. They have quickly taken a large share of trading value based on there aggressive brokerage charges. Flat Fee Stock brokers (also known as discount brokers) charges a fixed amount (i.e. Rs 15 or Rs 20) per trade irrespective to the size of the trade. The trader pays fixed price brokerage, say Rs 20, for trade of Rs 10,000 or Rs 1,00,000. This makes lot of sense to traders who trade multiple times a day.
When you buy 100 share of RIL at Rs 1000 per share, the brokerage charged by Fixed Price Broker will still be Rs 20; while the traditional broker like ICICI Direct will charge Rs 500 (at the rate of 0.50% of 100,000). This difference is even more for traders who trades in F&O segment. For example ICICI Direct charges 60/lot for option trading, so if you are buying 5 lots of NIFTY you would end up paying 300 brokerage while for the same the discount broker will charge you just Rs 20. A saving of more than 90% compared to a full service broker.
The above example clearly show that the brokerage charged in flat fee share dealing is significantly low and simple and this make a huge difference in the year end when you see your P&L account
List of Lowest brokerage Stock brokers
1.) Zerodha The Zero Brokerage Broker : A Bangalore based Zero Fee Share Trading broker who charges Rs Zero per trade for delivery based trades. In case you trade in intraday and F&O, pay flat brokerage of Rs 20 per trade. They are the largest discount broker in India with more than 150,000 clients. Click here to open account with Zerodha.
2.) Upstox Securities – Upstox is a Mumbai based broker which provide free brokerage for delivery based trade and .01% or Rs 20 per trade for intraday and F&O trades. They have an awesome trading platform called Upstox pro which you can use for trading. Account opening fees waived if you open account from here.
3.) Trade Smart Online : Trade Smart online provide one of the lowest brokerage rate in India at Rs 15 per trade irrespective of the volume and an unlimited plan for Rs 1899. But they provide trading only through NEST trading platform which is not that great. Open account here.
You can find our list of Top 5 Discount broker comparison and review here.
Why I should move to Flat Fee Stock Trading Broker?
There are multiple advantages of moving to a Flat Fee Stock Trading Broker.
- If you are a trader, it can end up saving you around 90% brokerage on most of your trades. No additional fees, just one low, all-inclusive rate. They are more affordable to average investors. With the saving of this size, you can trade more.
- It makes the calculation of brokerage really simple. Once you know the number of trades you did, you can simply multiply it with the fixed brokerage and find out the total brokerage bill you have to pay (excluding taxes).
- They are focused only on brokerage services and provide better customer services.
- Your can trade on most of the exchange now as discount broker work with all the main exchanges.
- Taxes charged on brokerage (i.e. Service Tax of 14% on brokerage) are less as brokerage itself is less.
But apart from these advantages there are some disadvantages also. Most of the time Flat fee brokers wouldn’t have a physical office where you can go and talk to a real person. Most of the discount brokers will provide most of there services online. So if you are a kind of person who prefers dealing with real person, Discount brokers are not for you. These brokers also don’t provide much of investment advice and expect you to trade on your own. These brokers will provide you with linking with most of the nationalized banks but withdrawal wouldn’t be that easy and it will take some time to come to your account.
Full service brokers
Finally I would like to add that some people still want to open account with full service brokers. You can question that since discount broker ask for so low brokerage, why will anyone want to open account with Full service brokers like ICICI direct or Angel broking. For that you have to look at the service provided by full service broker. Angel Broking is one of the best full service broker operating in India. They provide simple trading platform and if you are a starter, you will love the ease of there trading platform. They also provide support if you are just starting in trading and they charge ZERO for account opening. The brokerage they charge can go low upto .1% for delivery and .01% for intraday. The rate which you will get will depend on the initial margin check you provide while opening the account.
To open account with Angel Broking, please provide your details by clicking on the button below
Full service broker not only provide broking service but they do provide whole gamut of services including advisory service which in case you are just starting. you will need a lot. They also provide insurance, mutual funds etc under one website which makes managing them easier for you. Also generally, Full service brokers provide much higher margin than discount broker, so if you want high margin, then you should again look at Full service broker.
Read more about the best share brokers in India.