India Infoline has set up discount broking vertical; experts see consolidation in the space soon
Big stock broking houses are looking at setting up discount broking verticals as they face rising operation costs as compared to the revenue generated by traditional broking.
Discount brokerages charge client significantly lower fee than a traditional broking firm but without providing financial advice.
Market participants say discount broking is the future of the sector.
According to sources, India Infoline has set up a discount broking vertical and other stock broking houses are also in the advanced stages of setting up units.
Girish Dev, MD and CEO, Geofin Commtrade, said, "There is a large market and enormous opportunity in discount broking. It is not feasible for smaller and mid-level broker to sustain in this business with low investor base."
"For discount brokers, which are providing cutting-edge technology and offering ample services at low cost, the business is growing rapidly," said Nirdush Gaur, managing director and CEO of MoneyPalm, a discount brokerage.
Gaur said the discount broking community will see consolidation in the coming months. Some of the smaller discount broking houses will be acquired by a few of their bigger counterparts.
Discount brokers provide a flat fee based service, offering trade facilitation at Rs 15 per executed order for any amount of investment -- be it Rs 1,000 or Rs 1,000 crore. Broking firms are also giving brokerage-free trade offer on trial basis. Motilal Oswal is also giving one-month brokerage-free commodity trading facility to attract new investors.
However, Vikas Singhania, MD of Trade Smart Online, a discount broking firm, said the consolidation may be still some time away. "Mid-level brokerage houses are actively looking to acquire discount broking houses, while larger brokers set their own discount broking verticles," said Singhania.
At present, the country has 5.6 million online demat accounts, just about 10% of total population active on the Net.
Gaur of MoneyPalm said the emergence of discount brokers in the country has opened a new avenue of money-making opportunities for traders and investors through online channels.
The evolving of online trading by full-service brokers has enabled the brokers to have a complete new set of traders, who prefer to trade on their own. The rising smartphone penetration and the development of innovative technologies to withstand competition is likely to drive online trading further, said Singhania.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "brokerages")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}