Robinhood of Indian stock brokering: Traditional brokers open up low-cost trading to retail investors

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Winds of change may have begun to blow in the Indian stock brokerage industry, with even traditional brokerage firms now cutting costs and offering retail investors low-cost brokerage.

Winds of change may have begun to blow in the Indian stock brokerage industry, with even traditional brokerage firms now cutting costs and offering retail investors low-cost brokerage. First it was the brokerage company Sharekhan which started a separate entity named “Espresso” to get into discount brokerage. Later, Kotak Securities Ltd announced its free trade plan last week. The recent influx of new-era investors and traders, propelled further by the lockdown, has prompted a rethink, Kotak Securities Managing Director and CEO Jaideep Hansraj told Financial Express Online.

Sharekhan and Kotak Securities seemed to have taken note of the disruption caused by new era stockbrokers such as Zerodha, 5paisa and Upstox. The two traditional brokers have either changed their business or started a whole new business for competitive offers. The offerings are similar to the US-based stock brokerage platform called Robinhood. The platform gained popularity in the early months of this year when a large number of retail investors were attracted to Robinhood’s commission-free trading platform for stocks, ETFs and options. Some believe a flood of young investors using platforms such as Robinhood have been investing in the stock markets, which has in part helped US markets profit from their lows, despite the economy being in recession.

The new offers

During the launch of its new free trading plan, Kotak Securities said its customer research revealed the need for a competitive brokerage plan from a well-capitalized and reputable stockbroker in the market. Indian capital. “KSL’s Free Trade Plan fills this gap,” the company said. The plan offers zero brokerage on intraday trades and Rs 20 per order for all other F&O trades. Interestingly, KSL also offers fee reimbursement and brokerage no questions asked if the customer is not satisfied within a month, and it also gives customers the option of donating stock instead of cash. as margin for negotiation.

On the other hand, Espresso by Sharekhan has no brokerage for cash and takeout orders, while a fee of Rs 20 is charged for intraday trading. Espresso does not charge any brokerage fees on square orders in the event of loss. For F&O, Commodity and Currency orders, it only charges Rs 20 per order.

It’s time to rethink the strategy

“Clearly, new-era investors are knowledgeable, independent, and like to make their own investment decisions. The free trade plan is ideal for these investors,” he added. The early days saw an encouraging response for KSL’s new business plan. “There’s obviously a significant increase in leads and new account openings. A number of customers encourage us by leaving beautiful testimonials on our social media walls. We get accounts ready to trade in 60 minutes and clients rave about the ease, convenience and time savings,” he added.

New-age brokers welcome change

New-era stock brokerage firm Upstox welcomes the change the industry is experiencing. “We have seen the entry of an increasing number of online brokers including traditional businesses that have set up their business online and this has only increased the options for a first time trader and widened the penetration. shares in the country,” Ravi Kumar, Co-founder and CEO, Upstox, told Financial Express Online. “There is certainly room for more players in a country where there is only 3-4% equity ownership out of a population of 1.3 billion,” he added.

Upstox does not believe that the entry of traditional players into the discount brokerage market is a challenge for them. “India is a large market which is paving the way for more players. Today’s customer is smart and able to recognize a high quality product that meets their needs,” said Ravi Kumar.

While people are warming up to the idea of ​​investing in stocks, retailer participation in India is still very low, said Harsh Jain Co-founder and COO Groww. “We see this as a positive development – more players will further democratize investing, giving investors more convenience and choice,” he added.

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