If you are planning to start dealing in stock market and looking for share broker, then you must look for the following points before signing up.
1. Registration with Exchange/Regulator
Any broker can only offer stock broking services only after registration with Stock exchange and regulator, SEBI. Once registered with stock exchange it becomes the member of exchange and is authorized to clear all trades for its clients. You should never ever deal with unregistered intermediaries as it is illegal and highly unsafe.
2. Exchanges / Segments registered.
Any stock broker can only deal in those exchanges/ segments where they are registered as member. To become a member of exchange, there is a minimum base capital requirement, minimum net worth requirement and above all, it should fulfill the criteria of “Fit and Proper” person specified by SEBI. Even for registering for other segments like derivatives or retail debt, there is an additional base capital requirement other than certifications.
3. Trading platform
In India, entire stock market trading is done on the electronic platform. Brokers offer customized software which are equipped with various functionalities and are capable of running in different devices like Desktops, Tablets and Mobiles. Generally, broker give a demo of their platform which enable you to make the right choice.
4. Pricing
Different brokers offers different pricing plans. Their are certain brokers which offer value add service and ask for higher rates whereas there are entire breed of discount brokers that offers deep discounting on prices and provide a no frill services. As an individual, you may choose your own share broker based on your preferences.
5. Research
Though it is always advisable to do your own research before investing however mostly people rely on stock broker research. So if you are interested in reading research reports on Daily, Weekly and Monthly basis, then you should ask for a interim subscription atleast for a week even before signing up.
6. Points of presence
Most of the large size brokers are present across the length and breadth of the country. It is important to see the location only if you are not internet savvy. Various Online Discount brokers save their costs on building presence and pass of the benefits to customers. So if you do not have the time to walk in and can operate online, then it is better to save on brokerage costs.
7. Your Trading style
This is one of the most important parameter which can be a make or break for your capital invested in stock markets. If you are a long term investor and looks for various services in a comfortable manner, then spending little more should not matter you. However if you are a frequent investor or a daily trader, then you must look at saving as that can straight way reduce your break even point of a trade.
Hope these tips will help you and take the right decision in choosing the Share broker. However, if you realise that you have made a wrong choice, then it is not difficult to switch. A right share broker is the one who given you a best of services and should not give you advices to better their brokerages.
