When the common man has decided to invest his money in stock exchanges, he cannot buy or sell stocks directly from NSE or BSE. It requires the interference of middlemen popularly known as ‘stock brokers’, to execute the buying and selling of stocks for its investors. The origin of stockbrokers can be dated back to the 2nd century BC, during the Roman Empire. The profession faded, with the decline of the Roman Empire, and flourished again when Dutch East India Company released the first publicly traded stocks through the Amsterdam Stock Exchange.
A stockbroker is an intermediary that helps an investor facilitate the buying and selling of stocks at the stock markets on behalf of investors. They also help investors to manage their investments and money and help build a portfolio. A portfolio can be termed as ownership of a stock, bond, or any other financial asset with the hope that in the future it will return or grow in value over time.
As digitisation makes inroads in our daily lives, stockbrokers have pivoted online to provide their investors a hassle-free trading experience. There are a few well-known online stockbroker platforms like 5Paisa, Zerodha, Upstox, Angel Broking and Groww, etc.
Things to keep in mind while selecting an online stockbroker
A stockbroker earns income when investors buy or sell any kind of stock through its platform. Here are some of the things to be kept in mind before selecting an online stockbroker.
- Affordable brokerage charges
It is not necessary that an online stock broker charging high brokerage will offer better services. It is suggested to select an online stockbroker who understands the needs and expectations of an investor from stock trading. An investor should select a stockbroker who provides excellent stock trading services at affordable brokerage charges.
- Multiple trading segments
Investors should select those online stockbroking platforms that are trading in multiple financial products such as equity, commodities, IPOs, FDs, etc.
- Offers seamless fund transfer process
Investors should select those online stock broker platforms that come with 3-in-1 Demat accounts to provide seamless fund transfer services allowing investors to trade with ease. The 3-in-1 account consists of three separate accounts open together that include a bank account, a trading account -a share broker account that allows to trade in equity, F&O, etc. segments and a Demat account which holds the equity shares purchased by the investors. If investors open a Demat account with a non-bank stockbroker, then for every trading transaction the investor will have to transfer money.
- Expert research team
While selecting an online stock broker, investors should check the expertise of the research team provided by the stockbroker. It is necessary since the research reports provided by the stockbroker will suggest investors invest in the best stocks to give high returns.
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The origin of stockbrokers can be dated back to the 2nd century BC, during the Roman Empire.
Types of Stockbrokers
Stockbrokers can be classified into two categories:
- Institutional stockbrokers: They are large institutions and companies that have clients as companies and firms that trade in the market on behalf of them. They offer services such as investment banking, securities services, advisory services, and brokerage services to institutional investors. Nirmal Bang, Motilal Oswal Group and Anand Rathi are some of the institutional stockbrokers.
- Personal stockbrokers: They provide a wide array of financial services such as investment banking, advisory services, and brokerage services to small businesses and individual investors. Examples of personal stockbrokers are- HDFC Securities, Edelweiss Financial Services, Kotak Securities, etc.
Services offered by a stockbroker
In addition, to be a facilitator in selling and buying of stocks, stockbrokers offer a gamut of services to their clients, such as:
- Advisory Services
Stock market brokers own expertise related to the functioning of the stock market, performance of stocks and market trends, etc. They are associated with data and research findings of various brokerage firms to provide correct investment advice to clients.
- Limited banking services
Stock market brokers can provide few banking services such as interest-bearing accounts, electronic deposits, and withdrawals for which they charge a nominal brokerage charge from the clients.
Things to keep in mind for the new investors
Stock market brokers are an integral part of the investment scenario of a country. So,before selecting one:
- Every investor should see that the stockbroker is a member of stock exchanges and requires to be registered with SEBI.
- Investors can visit the SEBI website and find details of registered stockbrokers.
