Stock brokers are the most important elements of the stock market, as they work as the middlemen between buyers and sellers. They match the buyer with the seller, with respect to the transaction and charge a commission fee for the successful transaction. There are various types of stock brokers, which are classified according to the number and type of services they provide. Full-service brokers contain many departments that provide special accredited investors financial products along with alternate investment opportunities. Sub-brokers assist member brokers with buying, selling, and dealing securities. However, a new section of brokers, called discount brokers have taken the stock market by a storm.
Definition of Discount Broker.
- Discount Brokers are stock brokers conduct buying and selling trades for interested investors at cheaper prices, but they provide no investment advice or financial management services like full-service brokers do. They are a beneficial option for individuals who possess smaller capital, but wish to invest at a reduced fee.
- They don’t provide services such as tax planning, estate planning, research, advice, and personal consultations.
- Their clients usually include retail and institutional investors in India, and they are also referred to as flat fee brokers or budget brokers.
- They operate online mostly, which makes it a time-saving option for investors.
- Discount Brokers India consist of companies such as Zerodha, Wisdom Capital, RKSV, SAMCO, SAS Online, Trade Jini, and Prostocks that are top discount brokers which provide trade executions at a minimal price. These usually provide top-notch customer services with competitive brokerage rates.
The hype about discount brokers.
- Discount brokers have opened up shop only in 2010 in India. Since then, many investors have switched from traditional methods to discount brokers, especially since they offer 60-80 percent lesser brokerage rates and free trading terminals for everyone.
- The competition has been tough, which has encouraged a few traditional stock broker firms to switch to discount broker firms. IIFL and Master Capital, two very big traditional stock brokers have now started offering discount broker facilities.
- They serve as a phenomenal option for investors who engage in trade frequently. They trade many times, and dealing with discount brokers makes it easier as they use up lesser profits. These investors have an extensive knowledge of shares and the way around the market, and they do not require the extensive services provided by full-service brokers. Discount brokers are a new variety that gives a cheaper way out.
The procedure of dealing with Discount Brokers.
- Dealing with discount brokers is a process with minimum hassle. The discount brokerages give the clients their own accounts. There is minimal interaction with live brokers, as the whole process is online. The requirement for live brokers comes when there are problems with trade executions.
- These services usually cater for self-built investors, who have the expertise in the field of trade and exchange and can maneuver with online transactions. The websites are using friendly for active traders.
- Discount brokers provide services in real estate and financial management. In the real estate business, they help people buy and sell real estate.
Discount brokers are the new trend in the market, and their demand is increasing exponentially.