Stockbroking has been an age-old method of an individual or organization, who is registered or is a member of the stock exchange, representing the client, for buying and selling stocks in the market. The traditional way of stockbroking from its nascent days has been accompanied by valuable research, following up on market trends, and providing well-informed advice to the clients, on buying and selling of stocks.
Apart from facilitating the trading of stocks, the trust between stockbrokers and the client was built on the basis of not only transactions but also in the form of guidance and recommendations. The brokerage was charged according to all these services.
In the age of technology and the internet, stockbroking has undergone a huge change, from providing services offline to catering to clients and providing online trading and investment platforms. Since information is available freely on the internet on market updates and trends, stockbroking platforms through website and app, provide the same platforms for trading and investment in stocks, but mostly without the advice and suggestions.
The modern user and clients are usually well versed and tech-savvy and hence this arrangement serves the purpose. Hence, the different kinds of requirements of the clients have given rise to two types of stockbroking, namely, Full-Service Brokers and Discount Brokers and one should choose according to their need after being well informed about both.
The full-service brokers are like the traditional brokers who not only helps the client in procuring and selling stocks but also provide advisory information regarding asset classes like stocks, currencies, commodities. Moreover, apart from broking services, wealth management and depository services are also offered by the full-service brokers.
This creates a comfortable space for the client where everything, from trading, investment, and the transaction is managed by the full-service stockbrokers. The clients, apart from their decision-making process, experience a hassle-free financial activity. Most of the full-service stock brokers also provide assistance and a platform for the clients to invest in other financial services like IPO, insurance, mutual funds, bonds, and foreign exchange.
The brokerage is charged as a percentage which is also considered as commission, whenever a transaction takes place. Nowadays, the full-service brokers operate through offline and online mode to cater to every age group and varied needs of the clients.
This kind of stockbroking is ideal for new and frequent traders. Some of the full-time service brokers are Edelweiss, Axis Direct, Sharekhan, ICICI Direct, Kotak Securities, and many more.
Technology and the advent of the internet have given rise to the rise of discount brokers. These brokers offer a platform, mostly online through websites and applications, for the clients to trade anytime and anywhere.
They are registered with the stock exchange and can provide easy platforms for trading but do not offer advisory services. The brokerage is usually charged as a flat fee for most transactions and mostly Rs 10 – Rs20 is the brokerage amount for each order on most such platforms.
The discount brokers facilitate trading and investment in currencies, commodities, equities, options, and many more of these asset classes apart from buying and selling stocks. These platforms do not provide any research and recommendation for trading, investment, or transactions. Zerodha, Upstox, Tradejini are some of the most popular discount brokers in the country.
There’s really no one size fits all solution when choosing a stockbroker. It varies on the investment objectives and service requirements. If you have enough experience, time, and flexibility to take your own decisions without any help, then discount brokers are ideal for you.
On the opposite, if you’re new to the market and don’t like paying extra commission for consultancy services to save your time, then you should go to a full-service broker. Research and choose a broker that helps you to reach the optimal level of profit in your investment.