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Home/Basics of Stock Market/Stock Brokers/About Full Service Stock Brokers

About Full Service Stock Brokers

  • Created September 27, 2016
  • Author Chirag Joshi
  • Category Stock Brokers
  • Comments 3

Brokerage account / Online trading account

It is a well known fact that for trading in the stock and commodity markets, clients need a brokerage account (also known as an online trading account). These brokerage account services are offered by stockbrokers registered with the Exchanges NSE, BSE and MCX who in turn charge broker commissions for the services offered.

History of Stock broking companies in Share market ecosystem

Stock broking companies form a very important part of the share market ecosystem.

In the Outcry times, before the exchanges went electronic, the Bombay Stock Exchange was the predominant stock exchange in India.

Nearly all Brokers had offices on the iconic Dalal Street. Customers would call the Brokers phones or arrive at the offices to place orders or maybe even for casual gossip. The brokers would provide the customers with a wealth of Information, including market news, updates & rumours. Brokers also acted as advisers & advised clients on what shares to buy or sell.

Brokers would appoint sub-brokers. These sub-brokers would also gather & service customers. For their services, sub-brokers too were entitled to a large part of the Brokerage generated.

Settlement cycles used to be longer as well. Hence a client in Rural Gujarat may send the cheque via post & Courier on T- Day itself, but the Broker’s funds were blocked for nearly a week till the cheques came & were cleared. Or if he dealt via a Sub-Broker, the Sub-Broker would cash the cheques on behalf the Broker.

Many clients too faced a huge lag in getting information on their trades. The Brokers would send the Contract Note via post, which added a lot more time.

All of these costs added up & were huge.

This is how the Brokerage Business evolved in the Pre-Outcry times.

Evolution of Stock Brokerage Firms

After the Exchanges went electronic, many of the costs went down. As orders were routed electronically, the costs of maintaining & operating a Brokerage business went down significantly.

Major functions like accounting, delivery of shares etc. became systematic & computerized. A Broker could be rest assured that deliveries would happen on time & the menace of “fake share certificates” ended.

Sub-Brokers were started maintaining “Terminals” which displayed prices & could be used to execute orders. People would call up the Broker or Sub-Broker, ask for the quote & place an order. Many continued to visit the premises of the Broker or Sub-Broker & trade right from there.

With internet penetration becoming the norm, Brokers let clients trade themselves online. With a Client Code & Password and two factor authentication, clients could trade from their homes. Funds transfers are nearly instantaneously with Net Banking.

 

Discount Brokers Definition

Discount brokers unlike full service brokers, usually offer only pure execution services only. Their bread butter comes from flat fee execution commissions and other services, if any provided, are charged separately and not bundled with their execution service pricing.

Compare Brokerages – Full Service Brokers vs Discount Brokers

There are several factors that clients should consider before selecting their stock broker which include brokerage, service related factors, etc.

Factors to Compare Brokers Full Service Stock brokers Discount Brokers
Brokerage Rates Percentage Brokerage Flat fee brokerage based on executed order
Service Offerings Bundled services
Execution Services
Advisory and Research
Funding
Usually offer Execution services only.
Additional services if any are charged separately
Availability of Relationship Manager Yes in case of high networth clients No
Call and Trade Available and included in brokerage rate Facility available at an additional fee
Customer Support Online and Offline Mostly Online Support
Branch Network Branch network may be available across India Limited to no branch network due to online business model
Conflict of interest Yes since full service brokers also act as advisors and their fee also depends on the execution of the advisory. No conflict of interest since no advisory rendered.
Demat Account Services Usually Offered by full service brokers Only few discount brokerages have their own demat services as well

While full service brokers offer a host of services to their clients, most clients with Full service brokers in India continue to pay their full service stock broker for services not used by them. Here’s an interesting Economic Times article discussing the same.

Flat Fee Online Trading Account with India’s Leading Discount Broker

The recent trends in the stock broking industry indicate a shift from full service broking to discount broking. SAMCO, one of India’s Leading discount brokers, offers trading at a flat fee of Rs. 20 per executed order irrespective of the size or segment of transaction. This flat fee model has garnered huge savings in brokerage for Indian traders and investors.

Check out SAMCO’s brokerage pricing model on the SAMCO Brokerage Savings Calculator.

About Full Service Stock Brokers

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Tagged: broker commissionBrokerage Accountbrokingcompare brokeragediscount brokerDiscount Broker vs Full Service BrokerDiscount Broker vs Full Service Broker in Indiafull service brokerhow to select a stock brokerservice brokerstock brokerstock brokerage firmsStock broking companiesstockbroker

About The Author

Chirag Joshi

The author has over 9 years+ experience in media, traditional and digital marketing. Chirag currently leads the Marketing function at Samco Group and overlook all marketing and communications for the Samco Group.

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3 Comments

  1. Dharam Yadav
    6 years ago

    I made a decision to start investing in stock .So to open Trading,Demat and saving, which would be a prefer option discount brokers or full service stock brokers ?

    Reply
  2. Chetan Yadav
    6 years ago

    Sir I am mechanical engineer and i am not aware of share market. but i really wanted to invest in share market. what will be the total minimum cost i need to start this business. along with bank account. I am really looking for your guidance. you may consider me as aa below ground level in share market.

    Reply
  3. Vivek M
    6 years ago

    IM New and want to trade in share market. Please give me any advice where and when to invest money right place. I have no experience about trading.

    Reply

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SAMCO Securities Limited(Formerly known as Samruddhi Stock Brokers Limited): BSE:EQ,FO,CDS | NSE:CM,FO,CDS | MCX-SX:EQ,FO,CDS | SEBI Reg. No. INZ000002535
Depository Participant: CDSL: IN-DP-CDSL-443-2008.
SAMCO Commodities Limited(Formerly known as Samruddhi Tradecom India Limited) FMC Code-MCX: MCX/TCM/CORP/1326| NCDEX: NCDEX/TM/CORP/1123

Attention Investors:
“Prevent un-authorized transactions in your account --> Update your mobile numbers/email IDs with your stock brokers and depository participants. Receive information of your transactions directly from Exchange or Depository on your mobile/email at the end of the day. Issued in the interest of investors”

"KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary."

"No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

Please ensure you carefully read the risk Disclosure Document as prescribed by SEBI/FMC.
For any grievances/complaints Email - grievances@samco.in
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SAMCO Securities Limited (Formerly known as Samruddhi Stock Brokers Limited) : BSE:EQ,FO,CDS | NSE:CM,FO,CDS | MSEI:EQ,FO,CDS | SEBI Reg. No. INZ000002535

Depository Participant: CDSL: IN-DP-CDSL-443-2008.

Samco Securities is registered as a Research Entity under the SEBI (Research Analysts) Regulations, 2014. SEBI Reg.No.- INH000005847.

SAMCO Commodities Limited(Formerly known as Samruddhi Tradecom India Limited) SEBI Reg. No. INZ000013932

Samco Securities Limited is Mutual Fund Distributor registered with AMFI (ARN -120121)

Registered Address: SAMCO Securities Limited, 1004 - A, 10th Floor, Naman Midtown - A Wing, Senapati Bapat Marg, Prabhadevi, Mumbai - 400 013, Maharashtra, India.

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"Prevent un-authorized transactions in your account --> Update your mobile numbers/email IDs with your stock brokers and depository participants. Receive information of your transactions directly from Exchange or Depository on your mobile/email at the end of the day. Issued in the interest of investors"

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This is with reference to communication received from SEBI/Exchanges stating that some fraudster entities have been operating throughout India and sending bulk messages to the clients trading on the recognized stock exchanges on the pretext of providing investment tips and luring with hefty profits, all clients are requested not to get carried away by luring advertisements, rumours, hot tips, explicit/ implicit promise of returns, etc.

The modus operandi observed is that once a client pays amount to them, huge profits are shown in his account online inducing more investment. However, they stop responding when client demands return of amount invested and profit earned.

Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.

Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.

Pay 20% upfront margin of the transaction value to trade in cash market segment.

Investors may please refer to the Exchange's Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.

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