There are so many brokers in India now offer zero or cheap brokerage plans and I am wondering they dont become popular with traders like Zerodha or Dhan.
I trade between Zerodha and Dhan in 50-50, and I have not seen any issues on either of them for long time however these days Dhan feels much faster. Upstox is also ok, but I don’t use it any more because navigation keeps changing every now and then.
Zero or low brokerage plans offered by mStock, Kotak, Shoonya, Blinkx, 5paisa and quiet a few. I have tried mstock and kotak personally and never felt confident using their app or websites, kotak is still better compared to mstock but again something or other is always worrying when using them. Gave 5paisa a try but never traded on it.
There are many stock brokers that offer brokerage pricing less than the industry standard of INR 20, or with one-time / monthly plans and some even offer life-time free brokerage for free or few who say we charge money on profitable trades or likes.
There are many things to note here – a . By data, such broking platforms collectively contribute < 0.5% of accounts in India and they have been operating for a while now. It has not happened that everyone dumped their existing broking accounts and signed up for the free or cheaper alternatives. There are reasons why this didn’t happen. b . With aggressive pricing on zero brokerage, many such platforms outsource most of the things to do – app or web, technology, customer service, operations, product, infrastructure, devops, use off-the shelf products that are not customised to user’s needs, have not been tested for scale and more. And few of them outsource everything to 3rd party vendors and outsourced software developments or operations. c . Broking is a super complex product with thousands of moving pieces that have to work. After spending about 2 decades building many products myself – I can say that with confidence that it’s one of the most complicated fintech products. The day something goes wrong with the stock broking system – it has chances to wipe-out your profits. And you don’t want to be in a situation where your broking platform is not able to come back within a few minutes in market hours, let go for a few hours. The best of broking platforms go down for multiple reasons, there have been instances where exchanges do as well. So yes, you need a dedicated team, resources to ensure everything runs smoothly. d . Most of the serious traders who we meet, are more focussed on their trades, positions & trade setups v/s brokerage. Their expectation is a super reliable platform, which is the need of most traders – but with platforms that don’t make money – won’t have money to invest and build one. This is one complex circle. e . Many first time traders at times even consider charges applied by STT, Exchanges, SEBI, DP, Taxes as ones by brokers. For clarity – these are outside of brokerage and will be there across all broking platforms.
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note: This is copy-pasted from a post I had written about 1.5 years back.
Most active traders want fast and reliable execution, feature-rich platforms and great customer service.
Newbie traders and some active traders (who punch large number of sell orders for small premiums) may want zero brokerage as they are worried about cost eating in to their probable returns.
Because they don’t have direct trading on chart. I never feel confident without the drag and drop feature of Dhan. However, I heard Kotak Neo is also trying to implement this and it could be a challenge for Dhan as Kotak Neo has zero brokerage plans.
