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How Indian Stock Broking Industry has changed in year 2012?

Published on Sunday, December 23, 2012 by Chittorgarh.com Team | Modified on Monday, September 17, 2018

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With the participation and turnover in India Equity Market is growing strongly in recent years, the Indian Stock Broking Industry is going through a transformation phase.

In last one year the stock broker industry in India has seen many significant changes.

  1. The new generation of discount brokers has changed the face of the brokerage industry.

    Thousands of traders and investors moved to the discount brokers in last one year. The high performance trading platforms, good customer service and off course saving of over 60% on brokerage made them try these services.

    Unlike traditional broker who spend lot of money on advertising their services, the discount brokers has grown through word-of-mouth.

    The discount brokers are the future of the brokerage industry and if you have not tried them yet, I strongly suggest you to choose one of them and try. I guarantee you that you will not regret your decision.

    You can compare them and find the best suited broker for yourself at Chittorgarh.com or simply contact us and we will help you choosing one.

  2. MCX-SX, India's new stock exchange, got permission to trade in equity. This will give stiff competition to existing players like BSE and NSE in coming years. This is in the benefit of stock traders and investors as this will eventually bring down the cost of trading.

  3. Announcement of BSE SME and NSE SME exchanges allowing small and medium enterprises to raise funds from capital market. 13 SME companies listed on the SME platform in the first year itself and many more are in line.

  4. SEBI introduced 'No-Frill Demat Account' for small investors, which significantly reduces the AMC charged by the demat account providers. You don't have to pay the AMC, which generally ranges from Rs 400 to Rs 800 a year, if you hold securities with the value of lesser then Rs 50,000. AMC is limited to Rs 100 if the portfolio value reaches up to Rs 2 lakhs. This will bring larger retail participation in the stock market.

  5. SEBI has done many IPO reforms this year. One key decision was the allotment of a minimum number of shares to retail investors to increase the participation in the market. Wider acceptance of ASBA by investors this year has helped registrars to reduce the IPO share application processing time significantly.

Unlike many other large economies around the world, the participation in stock market by retail investors in India is the lowest. The focus of the Government of India this year was to build policies to encourage more retail investors to choose equity as a long term investment option. These policies and reforms will start showing results in coming years and the investors and broking industry will gain the most from this.

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13 Comments

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13. Mukesh Kothari  Apr 26, 2015 20:13 Reply
Hi ADB,

Thank you for your response on the article.

What I tried to explain here is the trend in the industry.

1. The brokerage matters a lot when you talk about daily volume of 1/2 Cr. I wld say, for this kind of volume, higher brokerage saving and low breakeven point are critical and thus the discount brokers.

2. I personally had better experience with Discount brokers customer services. Could you please highlight any specific area of customer service which you didn''t like?

3. ''Services comes at a prices'' id a myth in this reference as Discount brokers are not cutting on customer service, they are reducing the cost of trading using latest technology, controlling spending on infrastructure (branches), advertizing and commissions to middle men (sub brokers).

Again, there is no one-format which fits all. There will always a place for both discount and the traditional broker. It''s actually which ever suites you the best.

Mukesh Kothari
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12. BDA  Apr 24, 2015 14:07 Reply
@ADB

What service are you talking about ?
I do not want a RM who ill advises me or trades in my account on the sly.
Brokers are brokers & they are not advisors.
I will hire qualified advisors not a vested interest broker.
Brokers job is to the trade under my instructions period & why should I pay absurd money for such a simple job.

Also a broking licence is provided by satutory authorities afer scrutiny only so the safety of your money is at par with all/any of the brokers.

If the broker charges are high it meqans they are inefficient & which in turn will try to fleece you to cover thier inefficient business practices.
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11. ADB  Mar 5, 2013 14:10 Reply
Mr. Kothari, I appreciates your efforts and enthusiasm with chittorgarh website which is a very good platform for comparing the brokering firms.

However I am not much agreed with the fact regarding "Discount Brokers" I do not have much stock market experience (just last 6 or 7 experience of active trading) as they are no where stands in terms of customer service.

If someone is trading with the capital of 10,000 or 15,000 (which is also a hard earned money) then its okay. But when you are having daily volumes of 1/2 cr then I don''t think that is would be good to risk your fortune on these brokers. After all a old saying that service comes with a price.

That is my individual thought and as per my experience which was highly annoying.

Regards,
ADB
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10. Mukesh kothari  Jan 2, 2013 16:19 Reply
Dear Gurinder Ji,

You have to HDFC) will provide you a form. Fill that form and send it back to them along with your proof of identity. Thats it.

Hope this will help.

Mukesh
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9. Gurinder Singh Kooner  Dec 31, 2012 10:52 Reply
My DP a/c is with HDFC Securities, my current holding is below Rs50000/-, will they charge me less AMC fees, as prescribed by SEBI or I will have to open another NoFrill Account for this.... please clarify.... thanks...
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8. Gurinder Singh Kooner  Dec 31, 2012 10:49 Reply
Thanks to Chittorgarh team for this brief note,,,, it is very very informative summarizing the important market/DP related events/news. I think u should keep on mailing such briefing every month or quarter.... it is a good concept
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7. Mukesh kothari  Dec 26, 2012 22:02 Reply
Dear pkuppusamy,

Thank you for your comments.

1. Instant payment gateway charges for over 21 banks - Rs 9 per fund transfer.

Mukesh Please find the below link. This article talks about multiple options to transfer funds and most of them are free.

https://www.chittorgarh.com/article/zerodha_fund_transfer_deposit_withdrawal/21/

2. DP charges for delivery based equity selling - Rs 8 per transaction

Mukesh Yes this is true and most of the discount broker changes it. But as you said, even after paying this you still over 60-70% which is a good amount of saving for most of the traders like you.

RKSV and RK Global are among other popular discount broker. You have to choose the discount broker based on your trading patterns. If you regularly around 150 trades a month, RKSV offers better prepaid plan.

One important fee which most of the traders who moved to discount brokers find expensive is 'Call and Trade Charges'. Discount broker Zerodha charges additional Rs 20 per executed order placed through call and trade. RKSV changes Rs 25 for the same.

Other than these changes, I am not aware of any other hidden charges which affect most of the traders. Unlike traditional brokers, all discount brokers are very transparent in term of charges. You can find all these details on their website.

Mukesh Kothari
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6. pkuppusamy  Dec 26, 2012 11:15 Reply
Thanks Mukesh,

Yes you are correct, i could have saved 76 % of my brokerage in last year alone. That was equivalent to 10 % of my entire equity portfolio.

I saw few other charges on Zerodha like

1. Instant payment gateway charges for over 21 banks - Rs 9 per fund transfer.

2. DP charges for delivery based equity selling - Rs 8 per transaction.

This DP charges Rs 8 per transaction means, my effective brokerage for every selling will be 20 + 8, is that correct? Still it is cheaper than ICICIDirect.

Thanks,
pkuppusamy
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5. Narayan Gilra  Dec 25, 2012 09:29 Reply
Shri Kothariji,
First of all,
Wishing you Marry christmas. Then I am heartly thankful for giving such a useful adivce on this platform of Chittorgarh.com.
Sir, I want to know about discount broker, Can you provide us any contact no. of key person of discount broker.
I want to try at once. Now I am doing my business with Hem Securities Pvt Ltd & Hem Finlesae Pvt Ltd.
I am satisfied from thei services, but If I get lower brokerage in same services, I can make transfer of my platform of invetment.
Thank you once again Sirji.
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4. Rupesh Bhansali  Dec 24, 2012 10:22 Reply
Thanks for updating on broking industry
IF you add more in IPO industry will be more beneficial like
what are new rules
how it benefits to retail investor
ASBA mandatory for HNI segments
Etc
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3. Mukesh kothari  Dec 23, 2012 17:54 Reply
Dear Praba Karan,

The discount brokerage concept is picking up and many investors like you are now moving to them for stock, commodity and currency trading. But there are few areas where most of them still do not provide services including investment in Mutual Funds, IPO’s, Offer for Sales (OFS) etc.

The discount brokers are aware of this problem and working towards provide most of the services traditional brokers like ICICIdirect provides except market research & tips.

For investors like you, I suggest you to try Zerodha. They have zero AMC for trading account and pay as you trade service. Each trade at Zerodha cost you Rs 20 with Zerodha.

Simply check how much brokerage you paid in last one year to ICICIDirect. Then multiply the number of trade with Rs 20 and see how much you would have paid if you traded with Zerodha. I am pretty sure that this would at least 70%-80% less.

Please post the numbers here for readers benefit.

Thank you for your comment. Feel free to ask if you have any further question.

Mukesh
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2. Dilip Davda  Dec 23, 2012 15:01 Reply
The things are going to benefit the investors in long run.... ,,
Good article, keep it up,

all the best and wish you hectic 2013
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1. praba karan  Dec 23, 2012 13:01 Reply
Thanks Mukesh for detailed summary.

Currently i have ICICIDirect account.
I am holding this for 3-4 years.

I would like to know about the discount brokers.

I am a long term investor in equities. Also i invest in Mutual Funds(mostly thru SIP) & Bonds.

Suggest me the best discount broker, where i can my brokerage, & AMC.

Thanks,
pkuppusamy



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