Discount Brokers are becoming the face of brokerage industry with their low brokerage & advanced technology offerings to the retail investors.
With increasing volatility in the Indian Stock Market, rising Currency Rates and exceptionally unbelievable IPOs & Mutual Funds scheme Returns. All of these turbulence are attracting lots of retail investors to enter in the stock market for generating second source of income or to achieve their short-term financial objectives.
With these un-exceptional gains and changing Financial Technologies, the one who is getting the multiple returns without any worry is none other than the Brokerage Houses. Whether you buy or sell any script, brokerage will be levied for trading in the market. Earlier, it is difficult for the brokerage houses to generate daily volume turnover due to either compliance issues or the dealer-client in-house trading facility.
Now, with the advancement of the technologies, investors are becoming self-dependent and are preferring self-trading. Those days are almost gone, when we see group of investors sitting at the brokerage houses – watching TV and instructing dealer to trades on their behalf or asking for their tips.
With the stringent and timely up-gradation of SEBI Rules & Regulations along with the Advancement of Financial Technologies, these things are becoming obsolete.
Number of Stock Investors in India
In India, with population of 1.37 billion of people (Till May 2019) – only 2.67% i.e. 3.65 Crore of investors has active Demat Accounts in which both the Depository Participants – CDSL with 1.33% and NSDL with 1.27% has active client Demat account. While the rest of the India’s Population are still out from the market.
Difference Between Full-Service Brokers & Discount Brokers
Difference Between Brokerage Houses
On detailing further about the brokerage houses, the major market players are Zerodha, ICICI Direct, HDFC Securities and others. On comparing with the top brokerage houses with minimum average of 75,000 Active Demat accounts by 30th May 2019, Zerodha covers 15% of the market share, beating the ICICI Direct, HDFC Securities and Sharekhan.
And on the basis of total Active Demat Accounts in India, Zerodha (Discount Broker) tops the board with 2.6% market share by beating the market leader ICICI Direct (Full Service) with 0.7%. Whereas HDFC Securities holds 1.8%, Sharekhan holds 1.4% and Kotak Securities with 1.2% respectively.
Discount Brokers are those brokers who carries out their trading operation at reduced rates with no personalized services like Full-Service Brokers.
In India, there are only 20 Discount Brokers as compared to 10,000+ Full-Service Brokers. Out of which in the List of Top 5 Discount Brokers:
- Zerodha tops the board with 9.32 Lakh of client’s demat accounts.
- Following the board Upstox (RKSV Securities India Ltd) with 1.31 Lakh of Active Accounts by May 2019 secured 2nd Position
- And 5paisa secured 3rd position, beating down Samco to 4th and SAS online with 12000 Demat Accounts.
Whereas, on the List of top 5 Full-Service Brokers
- ICICI Direct still leads the top board with 8.55 Lakh of Active Demat Accounts, and HDFC Securities with 6.64 Lakh of Active Client’s Demat account as second Position
- Following the board with Sharekhan – 5.07 Lakh, Kotak Securities with 4.33 Lakhs and Angel Broking with 4.18 Lakh of active demat accounts
Brokerage business is one of the most lucrative financial industry, where the transparency is at the highest level with robust compliance & due diligence by the regulatory board & exchanges.
From 2010 onward, lots of investors are moving towards discount brokers due to their less Brokerage model & Mobile Trading Facility but still investors face difficulties in understanding & using such advanced technologies. Whereas full-services knows how to retain clients when it comes to relationship building but due to their heavy cost & aggressive sales model on other financial instruments, most investor tends to switch to the discount brokers to Do-it-Yourself (DIY).
Lastly, whether it’s a Full-Service broker or Discount Broker, both offers Trading & Demat account facilities to investors. And it’s up to the investors either to opt for value added services by Full-Service Brokers or Discount Brokers with technology driven trading platform and minimum value-added services.