Those who deal in share market especially as a trader, knows the term brokerage very well. Every trader, irrespective of the volume of his trading, loves to go for an account where he can get a discount in brokerage. Numerous brokers and broking firms are there with whom one can get the account of trading and DEMAT opened. However, before opening the trading account, one needs to know the brokerage rate which he will be charged by the concerned broker or Broking Company. This is important from the client as well as broker point of view as the whole game is set around this rate only.
The type of trading account:
There are various segments in the market. Cash and derivatives are the primary areas where the traders with the motive of instant profit love to trade. In the cash segment also there are intraday and delivery segments. In the delivery segment, the client buys the shares and pays the price. The shares are initially parked in the trading account, but later they are moved to the demat account. Any client who wants to keep the shares for long-term needs to keep his shares in the demat account only. In the day trading, the client usually buys the shares and sells on the same day. It can be inverse also where he can sell the share first and buy later. Hence it is known as intraday trading. Hence it depends on the client whether he wants to keep on trading or invest the amount in some shares for the long-term return. For this, the client needs to open a trading and a demat account with any broking company or a local broker, but he needs to be licensed by the SEBI.
The brokerage rate and discount:
For any broker, the main revenue of the business comes from the broking only. Even if one goes for the top 10 discount brokers in India, the scenario remains same. However, they offer the discount in brokerage under certain situations only. Here are provided some of these situations when such brokers have to allow a discount in brokerage.
- New Area: If the broker is expanding his business to the new area and the rival brokers are already present there, to have a foothold, he needs to launch some scheme so that the clients get attracted to him. In such situation, the brokerage rate is used as a weapon to compete the rivals and beat them.
- Nee Branch: In some cases, when the broker opens a new branch and does not have any client base, he needs to provide low brokerage so that the clients can open an account with him.
- Branch: In some cases, when the broker opens a new branch and does not have any client base, he needs to provide low brokerage so that the clients can open an account with him.
- Huge margin money: If a client is ready to provide a cheque of a huge margin money, the broker prepares to offer a discount in brokerage as the client is a cream one.
- Huge Turnover: If the broker sees that the turnover of the client is huge he may allow a discount in brokerage.
