IPO Investment with Discount Brokers in India

Published on Thursday, April 14, 2016 by Team | Modified on Tuesday, May 28, 2019

IPO Investment with Discount Brokers in India

Discount Brokers in India are online stock broker offering no-frill trading accounts to retail customers. They charge a fraction of brokerage (commission) in comparison to the full-service brokers. These low-cost trading services are for stock market investors/traders who can trade by themselves using the trading software provided by the broker. The online stock broker provides a free mobile trading app, trading website, and installable trading terminal.

Why discount brokers doesn't offer IPO, Bond, NCD and Mutual Funds?

Discount brokers do not offer add-ons like research reports, advisory, margin funding and a relationship manager. The discount brokers also do not offer Initial Public Offers (IPOs), Mutual Funds, Fixed Deposits, Insurance, NCD, Bonds etc.

Popular Discount Broker Reviews - Zerodha, RKSV, Trade Smart Online

Popular Full-Service Broker Reviews - ICICIDirect, HDFC Sec, Sharekhan, Kotak Sec

Common services offered by discount brokers in India

  • Trading in Equity (Delivery, Intraday and F&O Segments) at BSE and NSE
  • Trading in Currency Derivatives (F&O Segment) at NSE
  • Trading in Commodity Derivatives (F&O Segment) at MCX
  • Demat Account
  • Call & Trade (At small additional fee)
  • Trading Software's - All for free. Including trading terminal, mobile and website
  • Free Trading Account AMC
  • Zero deposit or minimum balance

Services not offered by discount brokers in India

  • Advisory & Research Reports
  • Margin Funding
  • Relationship Managers & Trainings
  • Local (neighborhood) support
  • IPO, Mutual Fund, Insurance, FD, Bonds, NCD etc.
  • Loans - Home, Auto, Personal etc.
  • Banking Account

Frequently Asked Questions

  1. 1. Why discount broker doesn't offer IPO?

    1. Discount broker charges 60% to 90% less commission. Their other charges i.e. AMC are also significantly low. The way they provide this discount is by cutting down the operational cost using technology and by other means i.e. no branches, no sub brokers, and no expensive TV ads.
    2. By not offering IPO, MF, Insurance, FD's etc. investment options, they save licensing cost and operation cost.
    3. It requires for a broker to be the registered distributors of the IPOs. Broker get a small amount commission based on the applications submitted through them which have been considered eligible for the purpose of allotment. The commission is so low that the discount brokers do not see any financial benefits in becoming the distributor of IPO shares.


  2. 2. How do I invest in IPO with a discount broker?

    While it makes it easy to apply for IPO shares through broker, you actually doesn't need a broker to apply in an IPO. Traditionally people use to apply IPO using paper form directly through banks and similar process is available now with some automation.

    Under ASBA facility for applying IPOs, investors can apply in any public/rights issues by using their bank account. Here are the steps:

    • Step 1: Download Application Form (PDF)

      Download particular IPO's 'Blank ASBA Form' or fill online ASBA Form on IPO Detail page on BSE/NSE website. Note that each application downloaded has a unique application number and it cannot be reused.

    • Step 2: Fill Application Form and Print-it

      Fill the downloaded editable PDF with information like name of the applicant, PAN number, demat account number, bid quantity, bid price and other relevant details.

    • Step 3: Submit Form to Nearest Branch

      Submit the application at the designated branches of the banks where you can submit this form in your town. The list of branches is available on same IPO detail webpage from where you downloaded the application form.

    The bank will now upload the details of the application in the bidding platform. Investors shall ensure that the details that are filled in the ASBA form are correct otherwise the form is liable to be rejected.


    Do I have any other option?

    If you are a frequent IPO investor, it's a good idea to keep an account with one of the full-service broker, preferably a 3-in-1 account with your bank. It cost around Rs 1000 AMC but makes its easy.

    Most stock market investors who have account with the discount broker in India are still hold an account with the full-service brokers for add-on services like this.

    The shares allocated through IPO can be transferred to the demat account linked to your discount broker trading account though an offline demat transaction (which is available online on most full-service brokers website).

    Will this change in future?

    Yes, we expect that few top discount brokers will eventually start offering this service. Brokers like Zerodha already started offering Mutual Funds. With IPO through UPI, all brokers including discount stock brokers will offer online IPO's.


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2. Hardik   I Like It. | Report Abuse |   Link | Oct 27, 2016 10:13:05 AM Reply
5Paisa is offering Mutual Fund as well as IPO.
2.1. Team   I Like It. | Report Abuse |   Link | May 28, 2019 4:50:21 PM
Yes 5Paisa offer online IPO through its parent full-service brokerage company IndiaBulls.
1. Suraj Dey   I Like It. | Report Abuse |   Link | Jan 6, 2017 11:17:55 AM Reply
Once I acquire a IPO/Bond offline, can I sell it in secondary market via discount brokers?
1.1. Team   I Like It. | Report Abuse |   Link | May 28, 2019 4:49:35 PM
Yes, there is no restrictions on selling the SME IPO with discount broker. SME IPO shares are trading in same way as main board companies. The only difference is that SME Shares are traded in lots. You cannot buy or sell 1 share of a SME company. You will have to buy/sell them in specific lot i.e. 3000 shares in one transaction.