What is Delivery Trading?
In India, “Delivery Trading” stands for taking or giving delivery of Shares in the DEMAT Account.
A Delivery trade happens when a trader buys or sell shares & does not square off the position on the same day. These transactions are settled as per the T+2 settlement cycles of the exchanges i.e. Shares bought/sold on Monday are sold on Wednesday and so on and so forth.
Note: In India, positional short selling is not allowed in the Cash Market. Hence in order to sell shares, a trader/investor has to own them first.
What is Delivery Brokerage?
Equity Delivery Brokerage also known as delivery brokerage is the brokerage payable on a delivery trade which will be settled as per the exchanges T+2 settlement cycles.
What is the difference between Delivery brokerage vs Intraday brokerage?
Brokers usually charge delivery brokerage and intraday brokerage at differential rates with intraday brokerage being cheaper than delivery brokerage.
There are 2 primary reasons why intraday brokerage is lower than delivery brokerage
- The Brokers margin obligations remain tied up only for the day in case of intraday trades whereas in case of delivery trades, the same remain blocked for T+2.
- The Risk involved in delivery transactions from T day till T+2 day is higher than the risk in case of intraday transactions where the broker’s exposure to risk remains only for a few hours at best.
Traditional brokers charge a higher Brokerage when Investors transact in the delivery trades with brokerage running as high as 0.6% or Rs.600 per Lakh.
However, as India’s leading Discount Broker – SAMCO charges the lowest delivery brokerage i.e. only Rs. 20 per order or 0.5%, whichever is lower.
You can compare and calculate intraday brokerage vs delivery brokerage on the SAMCO brokerage calculator.
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