Low Cost Demat Brokerage Firms- Should you opt for them?

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Are you still using Full-Service Brokers like ICICI or HDFC? Have a look at these Discount brokers with very low /NIL brokerage charges.

Full-Service brokers will eat your money each day, they charge very high brokerage. You may be aware, whether you make profits or lose money your broker will get his commission on each transaction.

for example: if you trade for Rs. 1 Lac then your brokerage charge from Demat accounts offered by most of the banks will be as high as 500 to 600Rs for one such transaction and it keeps multiplying for all additional trades as you do.

If you are a trader who buys & sells shares frequently and trades in the Derivatives market, one must check these low cost/discount brokers who are offering low brokerage charges, you can save money from such high brokerage charges.

Zerodha has brought this concept of low-cost brokerage in India back in 2010. Today there are around 50+ such low-cost brokers in India with various low-cost plans.

What are the major advantages of Low-cost Brokers?

  • Zero or Very Low Account opening charges
  • Zero or Very Low Annual Maintenance charges
  • Flat/Very low Brokerage charges

What are the Drawbacks of Low-cost Brokers?

  • Very poor customer service.
  • Poor research reports on stocks/ No recommendations on stocks will be given.
  • Their Trading platform/ Mobile App will suffer network issues frequently due to high volumes
  • Amount Transfer to your Demat account or taking funds out from your Demat account will take time, usually 1 to 2 working days.
Full-service brokers vs low-cost brokers
 Full Service brokersLow cost brokers
BrokerageCharges as a % of TransactionThey offer a nominal flat fee on each executed trade
Brokerage ratesTypically between 0.3 – 0.5%Maximum Rs 20 per trade.
Servicecs offeredThey provide trading platform along with research advisory for investment.They only provide a trading platform in Desktop/Mobile app (no investment advisory provided).
NetworkThey have a large number of branches in different cities.Usually they operate at central locations, do not have many branches.
Customer serviceGreat customer service along with relationship managers will be available.Online services/Telephonic customer care.
Add on servicesResearch reports, recommendations, funding, extended margin etcFocuses mainly on trading
3-in-1 Account Available (Saving+demat +trading)Not available
Top Broker namesICICI Direct, HDFC sec, Kotak, Ventura etcZerodha, 5 Paisa, Upstock etc

What are the best Low-cost Brokerage Firms

  • Zerodha

    • This is one of the best and the First Low-cost brokerage Firm
    • Equity Delivery: They charge Zero brokerage for Delivery of Stocks, means any transaction of stocks which is not intraday you won’t be charged any brokerage.
    • For Equity Intraday & Derivatives F&O: Their charge is only 0.01% of per executed order or Rs. 20 Rs whichever is less. Means maximum charge per executed order will be just 20rs. irrespective of the transaction value.
    • Available in invest in BSE / NSE / MCX in equity, commodities and currency derivative segments as well.
    • This is one of the fastest growing Brokerage firms in India, They have currently 8Lacs+ active account holders.
    • They have a great Education platform called Varsity by Zerodha- Great place o learn about the Stock market & Trading.
    • They have a platform to Buy Direct Mutual Fund plans without any brokerage- COIN
  • 5 PAISA

    • 5 PAISA is backed by their parent company India Infoline ( IIFL)
    • 5 PAISA website offers various other products like Car, Health, Term Insurance etc.
    • They charge flat 10Rs for each executed order in equity segment (Equity Delivery, Derivatives F & O, and currency F&O).
    • Their client base is around 80,000+
    • They are listed in the Stock market- Only Low-cost broker to list in Market
  • TRADE PLuS Online
  • RKSV
  • Trade Smart online
  • SAS Online 
  • My Value Trade
  • Wisdom Capital etc.

There are so many of them, mostly all these are similar models like Zerodha.

Bottom Line:  If you are a frequent trader who buys and sells equity in high volumes, you must consider choosing Low-cost brokerage firm.  Make sure you know all the drawbacks before you move on!

Also Read: Why you should never go for Traditional Endowment Life Insurance plans? Term insurance is the Best option!

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