A comprehensive guide to types of brokerage services available in market | SEO World

Friday, February 23, 2018

A comprehensive guide to types of brokerage services available in market

Anyone who deals with stocks and bonds is aware of the terms brokerage and broker charges. The broker helps the investor with his guidance, and recommendations along with executing the buying and selling transactions. The brokerage charged makes for the major source of income for the broker. The brokerage depends on the kind of services offered by the broker and assets they are managing for you.
There is no fixed rate of brokerage in the market, and hence the charges for the same vary as per the client and service provider. The type of brokerage, turnover of trading, and type of accounts are the major determinants of the rate of brokerage between the client and the service provider. Usually, a client seeks a service provider who can offer a discount in brokerage, but the service providers also have a few limitations due to which they cannot go below certain rates, and hence the client needs to check the areas where the broker can offer discount here.

Here are points you need to know about the brokerage charged by the brokerage service provider:

  • The brokerage is chargedfor settling the transactions along with the personalized trading and investment suggestions offered by them.
  • The STT and GST charged by the broker do not form a part of the broker’s income. These charges are levied by the state and the central government,and it is their revenue.
  • The brokers do not charge the same brokerage from each client. The amount of brokerage depends on your relationship with the broker and the volumes traded by the investor.

When an investor signs the agreement with the broker, the terms and conditions are mentioned wherein the brokerage rates for equities, futures and other options are mentioned. If there is any change in the brokerage rate, the broker will inform you in advance. You can look for the lowest brokerage charges in India depending on the services you acquire. Usually, the lowest brokerage means limited services by the broker.

Per lot brokerage
  • The per lot brokerage arrangement is applicable for futures and options than the equities. The future and options are traded in lot sizes which are defined from time to time.
Zero- brokerage
  • The zero or discounted brokers only offer the execution of trades and no research, trading calls and advisory services from their end. The zero brokerage services usually operate online which helps them sustain with no brokerage from clients. If you are looking for reports, updates, advisory, and research, you will have to opt for traditional brokers with high brokerage rates.
Assured returns
  • There are several brokerage services which charge ahigher fee from clients under thepretext of assured returns on investment. It is recommended not to fall prey to these promises. The market is highly volatile,and no one can assure you about the returns. So only pay high if you are satisfied with the services and not because they will fetch assured returns.
These are some basic concepts about brokerage which can help the investor in making the right choice.