Discount Broker Comparison

[timepass]

I have this doubt for quite some time now. Lately, with so many brokers offering zero brokerage, I couldn't believe how one can do business without charging any brokerage fee.

I guess it's all started with Zerodha with their 60 day challenge. Now I see few more names like Fyers, Finvasia etc.

What's the catch here? If they are not charging any brokerage fee, how they are doing business? Our money safe with the brokers?

Is their spread wider than other brokerage firms? I have heard about brokerage firms make money from spreads in forex, and I have been in an assumption that's the case with equities as well. But with zero brokerage, I wonder how wide their spread would be.

At least Finvasia is making business by charging for leverage. Don't know about the others. Maybe they get a deal from the exchange based on the turnover.

 

[sumosanammain]

Exchanges shared big profit with brokers on total turnovers they generated.
More the turnover more the profit for brokers, bcoz as turnover increases the slab(per Cr which broker pay to exchange) also decreases.

Scalpers and big volume traders who scaled position multiple times usually attracted by Zero Brokerage Broker. They generate the big turnover, hence indirect earning(through turnover charge profit sharing from exchanges) for such brokers. Also, small option traders are attracted by zero brokerage as they can save Rs 20-20 each trades.

Are you speculating about profit sharing by exchanges, or do you know for a fact. I am quite close to a lot of brokers, including the CEO's of 2 big discount brokers, and they have never mentioned this. And yes, my relation to them is beyond business, and they share a lot of insights into how the broking industry actually functions.

Would love to know your source for this information, and any links of NSE or BSE, showing payouts to these brokers.

 

[timepass]

Are you speculating about profit sharing by exchanges, or do you know for a fact. I am quite close to a lot of brokers, including the CEO's of 2 big discount brokers, and they have never mentioned this. And yes, my relation to them is beyond business, and they share a lot of insights into how the broking industry actually functions.

Would love to know your source for this information, and any links of NSE or BSE, showing payouts to these brokers.

Bhai, then please tell us how this zero brokerage (nearly zero brokerage) thing works and makes profit ?

Thanks in advance.

 

[bpr]

I have this doubt for quite some time now. Lately, with so many brokers offering zero brokerage, I couldn't believe how one can do business without charging any brokerage fee.

I guess it's all started with Zerodha with their 60 day challenge. Now I see few more names like Fyers, Finvasia etc.

What's the catch here? If they are not charging any brokerage fee, how they are doing business? Our money safe with the brokers?

Is their spread wider than other brokerage firms? I have heard about brokerage firms make money from spreads in forex, and I have been in an assumption that's the case with equities as well. But with zero brokerage, I wonder how wide their spread would be.

Hi nac long time..no see ...broker cannot widen spread ...this is exchange regulated NSE will not allow ....
All your order goes to exchnage ..the broker cannot take opposite position against you as in forex.

 

[sumosanammain]

Bhai, then please tell us how this zero brokerage (nearly zero brokerage) thing works and makes profit ?

Thanks in advance.

Na na na na Naa reee .... Naa ree....

 

[headstrong007]

Exchanges shared big profit with brokers on total turnovers they generated.
More the turnover more the profit for brokers, bcoz as turnover increases the slab(per Cr which broker pay to exchange) also decreases.

Are you speculating about profit sharing by exchanges, or do you know for a fact. I am quite close to a lot of brokers, including the CEO's of 2 big discount brokers, and they have never mentioned this. And yes, my relation to them is beyond business, and they share a lot of insights into how the broking industry actually functions.

Would love to know your source for this information, and any links of NSE or BSE, showing payouts to these brokers.

No, I am not speculating, this is the real fact. Brokers don't usually mention such sensitive details.

I knew, all these long ago directly from the owner of a brokerage house(I helped him a lot with innovative business idea freely, so shared inside details. . He clearly said exchange charges turnover from brokers as per turnover slabs and there is a reduction with volumes.
For example, if the minimum is about 190 per Cr for NSE Future, then the next slab is 175 per Cr. Most of the brokers fall with that 2nd slab so there is direct Rs 15 profit sharing if the volume is high.
For some brokers with high volumes, there is a 3rd slab of reduction which is Rs 165 per Cr.
Many brokers are paying only Rs 165-175 per cr actually when they are charging minimum 190/Cr or more. This is some inside details which no will share. If you approach directly to NSE as brokerage house business you may find out such inside details and the turnover slabs.

 

[sumosanammain]

No, I am not speculating, this is the real fact. Brokers don't usually mention such sensitive details.

I knew, all these long ago directly from the owner of a brokerage house(I helped him a lot with innovative business idea freely, so shared inside details. . He clearly said exchange charges turnover from brokers as per turnover slabs and there is a reduction with volumes.
For example, if the minimum is about 190 per Cr for NSE Future, then the next slab is 175 per Cr. Most of the brokers fall with that 2nd slab so there is direct Rs 15 profit sharing if the volume is high.
For some brokers with high volumes, there is a 3rd slab of reduction which is Rs 165 per Cr.
Many brokers are paying only Rs 165-175 per cr actually when they are charging minimum 190/Cr or more. This is some inside details which no will share. If you approach directly to NSE as brokerage house business you may find out such inside details and the turnover slabs.

Completely agree with that, but Brokers are known to pass on the reduction in Transaction charges as and when they move to different slabs.
What you have described, is not sharing of the Turnover Charges, its just a change in slab that the broker pays, which improves with better volumes.

I thought you were referring to some under the table understanding where brokers were paid a seperate amount if they did X amount of turnover.

 

[Newbie Day-Trader]

An excerpt from the very first post of Finvasia in their thread - http://www.traderji.com/community/threads/finvasia.103335/

How does Finvasia earn?

As mentioned above, we believe brokerage is an ancillary service and not a main industry hence our business model is not dependent on brokerage. We will still make money even if we don’t charge our clients. We have many revenue sources apart from brokerage that keeps us going

1) Exchanges pay every broker a volume incentive if the volume of the broker goes over certain benchmarks.

2) We will be launching a suite of products over next 2 years. A lot of these products would be free however there will be some advance products that will attract certain fees, which is another source of revenue for us.

Not to mention, I've read that margin funding has always been a significant source of revenue for full-service brokers, & obviously, both Finvasia & Wisdom have leverage-plans, so they're hoping to tap into that avenue as well, & of course, with very low operational costs compared to full-service brokers, it might just be enough for them to survive but we'll see how that goes. Nonetheless, I believe our assets are protected by Investor Protection Fund up to 25 lakhs in case of a broker-default/expulsion - https://www.nseindia.com/invest/content/defaulters_committee.htm

 

[headstrong007]

I thought you were referring to some under the table understanding where brokers were paid a seperate amount if they did X amount of turnover.

Yes, there is the separate amount of volume incentive when a broker goes above the certain limit of the above-mentioned 3rd and final slab. Above the 3rd but the last slab there is separate direct add-on volume incentive (which I have mentioned as profit sharing with brokers) as the reward.
It's actually separate amount, exactly like if they did X amount of turnover, then Y amount of extra profit share by the exchange.

 

[nac]

Hi nac long time..no see ...broker cannot widen spread ...this is exchange regulated NSE will not allow ....
All your order goes to exchnage ..the broker cannot take opposite position against you as in forex.

Hi!
Yeah, not as active as I was few years ago. Visit the forum few times a year and bumped into amrutham's thread and learned about Finvasia's zero brokerage. I kinda got curious. Didn't want to disrupt his thread flow, so thought this would be the appropriate place to ask.
Kudos to you, you're still maintaining that comparison file. How longs it's been since the first version - 3 or 4yrs?