Last updated on: January 11, 2024
Stockbroking is a service which allows retail and institutional investors to buy and sell equities. A stockbroking firm charges a commission on the trades it makes on a client’s behalf or a fee for retaining its services.
A stockbroker is a mediator having the authority to deal with stocks and securities in a stock exchange on the investor’s behalf. An investor can never directly trade in stock exchanges. To deal (i.e., buy or sell) a stock through exchanges, an intermediary is required who will help with the transaction. And, for providing this service, the stockbrokers charge a commission or a fee. They are generally associated with a stockbroking firm, but can also work independently. They also play another vital role – providing information that helps investors to make correct investment decisions.
A few of the services that a stockbroker traditionally provides to its clients are:
- They give accurate advice on buying and selling stocks and other securities. Since they know the markets, they advise their clients on what and when to buy stocks or sell them. They minutely research securities before making any recommendations.
- Since they work on behalf of their clients and handle the associated paperwork, they act as record keepers of all transactions, statements and so on.
- They also manage the client’s investment portfolio, provide regular updates to them and answer the investment questions that a client may have.
- They even inform their clients about any new investment opportunity in the stock market and helps them in making changes in investment strategies depending on the market conditions.
Stockbrokers are controlled by – the Securities and Exchange Board of India Act 1992, Securities Contract Regulations Act, 1956, and the Securities and Exchange Board of India (Stockbrokers and sub-brokers Regulations), 1992.
They are also regulated under other rules and regulations and by-laws that SEBI may issue from time to time. Every stockbroker in India needs to be a member of stock exchanges and should be registered with SEBI. They must display their registration details on their websites and their official documents.
Types of stockbrokers
Based on the types of services, there are two types of stockbrokers
They offer a full mound of services to their guests. They’re traditional brokers who give a trading facility coupled with counselling services. For this reason, the costs charged by full-service stockbrokers are high, and the brokerage they charge is based on the total quantity of trades that are executed by the customer. The full-service brokerages are established players who have branches located all over the country.
Examples of Full Services stockbrokers in India include:
- Angel broking
- ICICI Direct
- HDFC Securities
- Motilal Oswal
- Edelweiss Review
- Axis Direct
They have come into reality due to the increased use and accessibility of the Internet. These brokers supply an online trading platform for their clients. However, they don’t offer counselling services and research facilities. For this reason, discount brokers also charge smaller commissions, which is a substantially flat figure.
Online stockbroking services are brisk since deals can be done with the help of the Internet, and the broker can also connect with the customer through emails and give updates.
As of recent years, the two most eminent Full-Service Stockbrokers are:
Angel broking –
Earlier known as Angel Broking, it is presently Angel Broking Limited. It was founded in 1987 and offers an extended array of trading and investment products including stock and commodity broking, investment advisory services, margin funding, loans against shares, and financial product distribution.
They offer excellent value for money to their clients through their diverse offerings. Along with low brokerage rates, other benefits of Angel Broking are – free research tips and excellent offline support to traders and investors etc.
Angel Broking is an active participant with Central Depository Services Limited (CDSL) and is a member of – the Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and National Commodity & Derivatives Exchange Limited (NCDEX).
This leading broking firm is known to have more than 11,500 sub-brokers and franchise touchpoints across 900+ locations in India and claims to have over 1 million clients.
The company’s financial services include:
- Commodity & Currency Trading
- Life Insurance
- Portfolio Management Services (PMS)
- Mutual Funds
- Loan Against Shares, etc.
Motilal Oswal Broking
In India, Motilal Oswal is one of the top-performing full-service brokers. It is primarily known for the best trading applications, portfolio management offerings and prompt customer support. It is considered India’s first broker that offers 100% paperless trading and a Demat account where the clients can get instant day account activation on receipt of the application.
It is even one of the oldest stock brokers in India as it was established in the year 1987. It is based out of Mumbai and offers a wide range of financial and investment services. The broker has a diversified client base that includes retail customers, mutual funds, foreign institutional investors, financial institutions and corporate clients.
It has created and published more than 30,000 research reports on more than 260 companies spread across almost 21 sectors. Being a 6-time winner of Best Performing Equity Broker (National) by Financial Advisor Awards, the broker is known to have a solid research team. They invest around 10% of their revenue in equity research. By the year 2017, they had 30 research analysts researching over 240 companies across 25 divisions.
Discovered by Raamdeo Agarwal with trading and investing permissions, the firm includes different financial instruments like:
- Share Market
- Wealth Management
- Institutional Broking
- Asset Management
- Investment Banking
- Home Finance
- Private Equity
- Mutual Funds, etc.
Comparison between the two Broking firms can be done based on their Trading Platforms and Pricing:
Angel Broking as a broking firm leverages technology to enhance the trading experience of its clients, it offers a range of trading platforms for Desktop, Browser and Mobile to meet the diverse trading needs of clients.
Their mobile application enables a platform for its clients’ trading and investment needs and is powered by ARQ – a rule-based investment engine. It is a comprehensive mobile trading app that provides the latest news, reports, and real-time updates at your fingertips.
Having some of the most innovative features, the app guarantees high-speed trading without glitches. It has been awarded the ‘Best Mobile Trading App’ award at the Global Marketing Excellence Awards in 2016.
Motilal Oswal offers a wide range of trading platforms to cater for the diverse needs of its clients available on various devices like desktops, tablets and mobile. Their trading platforms allow investors and traders to carry out hassle-free trading across a range of devices.
The online trading app comes in both desktop and mobile versions. It is specially designed for advanced traders and offers a variety of advanced trading features and quicker access to insightful market information and tools to high-frequency traders. It provides features like – quotes with detailed information about the company, ways to directly place orders from the watchlist, define and manage alerts, etc.
Angel Broking is a full-service broker and charges a percentage-based commission to its clients. It refers to the basis of the specific percentage of the trade value and the actual brokerage is decided for the clients to pay. The firm primarily boasts of 4 different brokerage plans from which a client can choose a plan based on the initial capital he or she is expected to bring in.
Motilal Oswal has brought in several charges that its traders and investors are required to pay. Some of the big ones include – account opening, maintenance charges, brokerage, transaction charges, stamp duty, taxes etc.