Who is a stock broker?
Brokers, alternatively referred to as trading members, play a critical role in the stock market. On behalf of their clients, they carry out operations including stock purchases and sales. A very minimal brokerage fees are charged in exchange for this service. They take care to settle payment to the exchange and transfer of shares in the stockholder's demat account. A stock broker must have registered to SEBI to provide brokerage services. Stock broker could be an individual or a company.
Two type of stock brokers
In India there are mainly two types of stock brokers: Full service brokers and discount brokers.
1. Full service broker
A full-service broker offers a broad range of services to his or her clients. The majority of full-service brokers have locations in major cities where customer care representatives may meet with customers personally. These brokers provide personalised help for investors with a range of diverse interests and degrees of competence through customised brokerage plans and services. Clients with sizable portfolios may even hire professional service managers to oversee their holdings.
2. Discount broker
The primary difference between discount and full-service brokers is the breadth of services they offer. Discount brokers execute customer buy and sell orders but do not provide any extra services. As a result, they also charge a significantly lesser commission. Due to the fact that they solely provide transactional services, businesses may not have a large number of physical locations. This helps them maintain minimal operational expenses. These brokers mostly operate via internet platforms.
Role of stock brokers
Stock brokers plays important role in the financial market system. The role of a stock broker is to provide the leverage and investment opportunity to the investor. They help investors in buying and selling shares. The broker facilitates transactions by providing a platform for trading shares on an exchange.
Leverage is a type of financial instrument that allows traders to take bigger positions than they could otherwise afford. The trader borrows money from the broker to execute their trade and then pays back the loan with interest over time. Below are some basic services which a stock provider provide to a trader or investor.
- Stock brokers help to open a Demat account with the Depositories like NSDL or CSDL
- They provide trading software to trade in stock exchange
- Settle payments with the exchanges
- Transfer shares or securities to or from Demat account
- Stock brokers also provide leverage to buy more shares
History of the stockbrokers
In 1602, the Dutch East India Company began trading publicly on the Amsterdam Stock Exchange. The stock broker profession grew as a result of the Dutch Empire's indoctrination of private property rights.
The London Stock Exchange was founded around the end of the 17th century, while the New York Stock Exchange was founded almost a century later, in 1792. In 1875, India and Asia saw the establishment of their first stock market, the Bombay Stock Exchange.
How to choose the best stock broker?
Nowadays, all stockbrokers assert their reliability by virtue of being registered with the SEBI. However, just though they are registered with the SEBI does not guarantee their long-term viability. Numerous smaller brokers have been put out of business or have just declared bankruptcy.
Therefore, to prevent any inconvenience, clients should open a trading account with the best stockbrokers in the market. Above list show the brokers with most active clients show this could be a deciding factor to choose the growing stock broker.
Personal and financial requirements should guide you in selecting a best broker. When making your final decision, keep the following considerations in mind.
- Brokerage fees: Each stockbroker has a different brokerage cost. While discount brokers charge minimal fees, a full-service broker charges more but also provides a broader range of services. Prior to selecting a broker, compare the fees and services offered.
- Customer reviews:Check out what other people have to say about your product or service before making a purchase. You may learn a lot about a broker just by reading through the comments section.
- Check history: If a company has a history of poor performance, you should exercise caution. Conduct a thorough search of the various stockbrokers in India. Compare the performance with several broker agencies online, search for reviews and reports published by financial publications, and check for rankings.
- Collect feedback: Speak with relatives and friends who have invested with a specific broker and inquire about their experience. Even yet, remember that each person has their own unique perspective and tastes that influence the information they provide.
In the above list we have provided the total active clients, Ratio of complaints received from the total clients, and how many complaints have been resolved. You can filter them to find your best stock broker.