HYDERABAD: With an eye to attracting new customers, discount brokerage companies across the country are ramping up efforts — attracting not just new investors but also those from full service brokerages.
Zerodha, Trade Smart Online, RKSV and others are some of the popular discount brokers in India and by charging 70 to 80 per cent less than what full-service brokers charge, these platforms are steadily increasing their client base. Riding on technology and providing a convenient,
do-it-yourself platform for investing in stocks is driving the growth in these firms.
“We have about three lakh clients and an average trading turnover of over Rs 10,000 crore. We aim to get one million clients on our platform over the next three years. With more and more Indians showing interest to invest in stock markets, we are bullish about further growth,” Nikhil Kamath, Co-founder Zerodha, a leading discount brokerage firm said.
While full service brokers like Sharekhan, ICICI Direct, and HDFC Securities among others charge brokerage as a percentage on the trade value, discount brokers charge much less — charging a flat rate on the trade, irrespective of trade volume.
As a result, trading through discount brokerage platforms is helping investors save around 80 percent on brokerage, when compared to full service brokers.
But how are discount brokers able to come up with such an attractive proposition? “Full-service brokers have offices across India, staff like relationship managers and they even offer research and tips. As a result, they charge for the entire service spectrum, making trading on these platforms expensive when compared to discount brokers.
“But, discount brokers restrict themselves to providing an online trading platform to invest in stock market, which is the core need of investors. They do not have offices and staff across India, cutting costs, and the benefit is eventually experienced by customers,” explained Vikas Singhania, executive director of Trade Smart Online, a discount brokerage firm.
Successful discount brokerages boast a strong technology platform offering online stock trading opportunity, drawing investors towards them. Experts say, it is mostly tech savvy young investors who are opting for discount brokers.
“Most investors do not use many services provided by full service brokers, but have to pay for it. Investors who need just a platform to invest and do their own research are selecting discount brokerage firms. In fact, more than 50 percent of our clients trade on smart phones,” added Singhania.
According to stock market experts, discount brokers already account for about 20 to 25 percent of total trade on Indian stock exchanges.