“In India I see both discount brokers and full-services coexist with different business models.” – says Nithin Kamath, Founder/CEO of Zerodha.
A new breed of discount brokers, charging investors only a flat fee for trades in the currency, stocks and commodities exchanges, has emerged, as full-service stockbrokers face dwindling revenue with retail investors turning their back on them.
Discount brokerages charge a fixed rate of, say, Rs 20 per transaction, whether the value of shares transacted is Rs 5 or Rs 5 lakh or Rs 5 crore. With full-service brokers the practice is to charge brokerage in proportion to the value of shares traded. Put simply, higher the transaction value, the higher is the broking charge.
Zerodha, Compositedge, RKSV and Achievers Equities, among others, have emerged in the past two or three years. They attract small investors and are willing to trade on their behalf in stocks, equity derivatives, currency derivatives or commodities for a fixed fee, irrespective of the volume of transaction.
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