The stock-brokerage industry has been experiencing change for several years. Discount Broking firms who charge a much lower brokerage fees than their full-service counterparts, have turned the business model of the industry on its head while steadily increasing their market share.
Many of the full service players, such as IIFL, ICICI Direct and Sharekhan, have been forced to take note & are either strengthening their services or planning to follow suit.On the 1st of December, the industry received an even bigger jolt when Zerodha announced they would be charging no brokerage for some of their services.
Many executives, however, breathed a sigh of relief when they found out that it only applied to delivery brokerage.Sajeev Sasidharan, spokesman at MyValueTrade, another discount broker, dismissed the move as a marketing strategy designed only to create news but change little for customers. “Customers in the delivery segments have a much lower frequency of trading than those in other segments, so the amount of brokerage they pay to discount brokers is practically negligible. For example, even if a trader executes 50 trades in a month, our platform charges him Rs. 500, insignificant compared to his cumulative turnover.”
Nithin Kamath, the CEO of Zerodha
Nithin Kamath, the CEO of Zerodha, had earlier admitted that almost 90% of the company’s revenue came from the Intra-Day and Futures and Options Segments.“That’s the standard across discount brokers,” said Sajeev. “Most customers who use discount brokers trade in the intra-day or the Futures and Options Segments, because of the high frequency & subsequently large turnover. Nothing has changed for those customers.” When asked if this move will result in the dilution of market share for the other discount brokers, Sajeev denied the possibility.
“No existing customer for any discount broker is going to be lured by this offer. It might temporarily help them attract a larger share of first time investors, but most seasoned investors trading with discount brokers are experienced enough to realise that this step doesn’t create any real value for them.” Would this create a pricing war in the industry? Sajeev from MyValueTrade said that it was unlikely, but it will definitely increase the pressure on traditional brokers to adapt to an industry that is rapidly changing.
About MyValueTrade
MyValueTrade has been leading the democratisation of the broking industry with its revolutionary discount broking plans, allowing its customers get more out of their investments. The company offers a choice between fixed brokerage and per-order charge, while its online stock trading platform and stock trading application allow trade across all segments with a single login and an intuitive user-interface. MyValueTrade have amongst the lowest brokerage, and a growing customer base in all parts of India.
Courtesy by www.businesswire.com
