Who is a Stock Broker? Know meaning, different types of Stock Brokers, services offered by full-service and discount brokers in India.
When it comes to the stock market, many people are paying attention to stock trading and these days investing in the stock market has become very widespread.
It requires good analytical skills and knowledge before starting trading and making a profit in the stock market. Where many of us want to invest but due to other work commitments, we can't do. This is a place where stock brokers play a significant role.
As we all know that stocks are traded through an exchange. Although, an investor can't trade directly in the stock exchange. We always need an intermediary who will help us in trade finance transactions through the stock exchange. This middleman must be licensed and regulated financial firm or an individual who has the authority to buy and sell stocks and securities in a stock exchange on our behalf. Such a firm or an individual is known as a stockbroker. They will charge a fee or commission for providing this service.
In simple words, stock brokers or share brokers in India are a registered member of the Stock exchange and regulated by Securities Exchange Board of India (SEBI).
Brokers have good knowledge about the stock market, they can provide information and advice on buying and selling stocks and other securities so we can make correct investment decisions. Before making such recommendations, they thoroughly research on securities.
On the client’s behalf, they timely handle associated paperwork and maintain records of all the statements, transactions and so on.
By providing regular updates they also manage investment portfolios and inform about the new investment opportunity in the stock market.
Depending on the market conditions they also help to make changes in investment strategies.
You'll normally come across two types of stock brokers in India:
A full-service broker charges a fee or commission for the range of services it offers. Full-service stockbrokers offer a large assortment of diversified financial services and products, normally they assign a licenced broker to every client. They have their own research departments and investment banking that provides their own analyst recommendations.
Full-service brokers are also called traditional stock brokers. A full-service broker charges a higher commission as compared to discount brokers. They offer a wide array of services, including tax advice and investing, retirement and financial planning and regular portfolio updates. Some of the leading Full-Service Brokerage firms are HDFC Securities, ICICI Securities, Sharekhan, Axis Securities, Angel Broking and many others.
These firms charge lesser fees or commission in comparison to full-service brokers. So, discount brokers have a flat brokerage model that is relatively lesser than traditional stock brokers. They generally do not give any financial advice to their clients. With the low brokerage fees and other online services, one can save more by holding this kind of account. And in this, according to learning, is best suited to a Do-It-Yourself investors who can handle their portfolio.
It is beneficial for the beginners, who want to learn new things on a daily basis and to execute it through the trade and suppose if the trade goes wrong then the fees or commission that is to be charged less and that’s the reason it is useful for the new learners. Some of the leading Discount Brokerage firms are Zerodha, Samco, 5Paisa, Upstox, Fyers and many others.
With proper financial education, stockbrokers require the passage of various industry exams. Moreover, nowadays it seems that due to the proliferation of the internet the role of stockbrokers has changed dramatically.