The beginning of the 21st century witnessed a revolution in the way life was lived, work was done, businesses were carried out and a lot more. The revolution was caused by a ground breaking invention; we so dearly know it as the “INTERNET”. It connected everything with everything, changed the way we interacted, the way we worked, the way things were done and everything else including the way trade was done. The change in the trading market gave way to a totally new concept of broking i.e. “Discount Broking”. Discount broking basically works on the concept of low-cost leadership and targets those individuals who are looking to minimize their brokerage cost with added facilities of convenience and control. The concept has been a massive success and has been well-accepted by the traders.
Discount broking firm, being a new concept is covered with a lot of myths and skeptics do try to stay away from it owing to the rumors that are going around the market. Well, every good thing in this world has initially faced criticism and the same has happened to the concept of discount broking. This article focuses on busting the myths and giving the traders an honest view of the discount broking services. These myths are:
TrustworthyTrustworthiness:
Discount broking firms are as trustworthy as the full-service brokers. They are registered with the stock exchanges and work according to the norms of SEBI.
Customer Service: There is a belief that as they deal in low-profit margins, they would be compromising on areas such as “Customer service”. Well, it should be noted that discount brokers provide excellent customer service; in fact, at times they are better than the full-service brokers.
Lack in good services due to low-profit margins: It is a fact that discount brokers work on skinny margins as compared to the full-service brokers but that doesn’t make them compromise on the service quality. The reason why they can afford working at such a low margin is their ability to remove cost centres and divide the benefits between them and the customers. As the operations are completely online, their operational cost is low.
Services being offered:
Discount brokers offer trading services in currency derivative, commodity and stock segments across all the popular stock exchanges.
Hidden fees: unlike full-service firms, the discount brokers charge no minimum brokerage or hidden fees. They hold the title of the most transparent broking type. All the software provided are free of cost including the mobile Apps, website and the trading terminal. They have no Annual maintenance cost (AMC). They provide brokerage calculators and research tools that can be made use of for free. They do charge for Call and trade facility to discourage customers to use it.
Automated trading: As the broking type has emerged from the internet revolution, it provides semi-automatic /automatic trading facility where trade can be made with ease and at a lower brokerage.
Number of customers: The trend is changing and it is quite visible. Over the past 3 years, more than 3 lakh customers have moved to discount brokers from the traditional full-service broking firms. As it offers the lowest brokerage, it’s possible for the clients to trade frequently with shorter break-even point to make profits and thus has more active clients as compared to the full-service broking firms.
Initially, discount broking concept was considered “too good to be true” but it has proved to be of real value and has benefited the customers immensely. It has taken the broking industry by storm by its cutting-edge technology and superior customer service. It won’t be a surprise if we see the
discount broking firms overtake the traditional competitors as they have a lot of potentials.
A sky is a limit!
Be Analytical, Be Safe and Happy Investing!
