If you are looking for Stock Brokers offering Lowest Brokerage charges in India in the year 2016, then here is the information listed. This articles include brokers like Zerodha, RKSV, Tradejini, MyValueTrade that offers the complete range of brokerage pricing to match your trading need. Few Stock brokers or Discount brokers like Zerodha and RKSV offers Rs. 20 per trade for F&O transactions, while delivery transactions are free. MyValueTrade offers trading at flat Rs.10 per trade apart from fixed charge of Rs. 1000 per month or 10000 per year towards brokerage rates. Also find here lowest brokerage charges from Full Service brokers like Angel that Charges as low as 0.012% for trading and 0.12% for delivery transactions.
Whenever we trade in stock markets, we need to pay a brokerage to our Stock broker. Indeed Traders keep looking for Lowest brokerage charges more than anything else. This brokerage is a fee that a stock broker earn for facilitating the transaction. So a Trader need to incur this extra cost for for buying or selling of share in stock exchanges. In India, earlier share transfer was a manual process and involves lot of handling issues but now all stock, commodity and currency exchanges are electronic and thus most of processes are either automated or well controlled.
There was a time when stock brokers use to charge 2% flat fee for buying or selling but with electronic mode and new generation Online brokers that changes the entire dynamics. They started charging brokerage in basis points (1% = 100 basis points) India Infoline launched 5paisa.com and started charging 0.05%.on the turnover value, Initially people believed that it is not going to work but later all other shifted to the model sooner or later. Now a days most of the brokers charges brokerage in percentage terms.
In recent few years, few brokers come up the curve with new style of pricing structure. Instead of charging as percentage, they started charging a fixed amount per trade or fixed amount per month for each segment. This brokerage structure is applied to all the customers irrespective of any turnover commitments or margin amount criteria. However such lowest brokerage charges are clubbed with Online terminal and self service mechanism. Discount brokers do not provide assisted trading through Dealers or Relationship Managers. Some of such Discount brokers are that offers these lowest brokerage charges are:
Zerodha
Zerodha started the trend with charges as Rs.20 per trade or 0.01% – whichever is lower. This means that the maximum brokerage that you have to pay is Rs.20 for any type of transaction. In an update, Zerodha has stopped charging brokerage for delivery transactions. Which means that all investments into stock markets can be done for free of charge.
TradeJini
Trade Jini is a relatively new player but again offering Rs. 20 per trade as their offer to attract traders. They provide this offer without any condition and regardless of volume commitment.
Upstox
Upstox followed the trend but with a twist. They offered a Rs. 20 per trade however along with first five free trades per month. Not only this, in another plan, they are offering a flat brokerage of Rs.3,999 for equity and derivatives, 2,999 for commodities and 1,999 for currency transactions. For trading unlimited in all segments, they are offering an ultimate plan at just Rs. 9,999/
Lowest Brokerage Charges – Is it is really a Low Rate
To evaluate the so called “Lowest brokerage charges”, let us do some calculation by comparing the ‘Brokerage per Trade’ with traditional ‘Brokerage per Volume’.
Delivery Transaction (buy or sell)
For deliveries mostly brokers charge brokerages in the range of 0.1% to 0.5% (for our example let us assume 0.2%) and said Discount broker charges Rs. 20 or 0.1%-whichever is lesser. So let us assume that we will buy shares of Rs. 2 lacs in 5 orders of Rs. 40,000 each .
Brokerage paid to traditional broker = Rs. 200,000 X .2% = Rs. 400.00 (Rs. Four hundred only)
Brokerage paid to Discount broker = 5 Executed order X Rs20 = Rs. 80 (Rs. Eighty only)
(Note : Per trade brokerage is levied on each executed order which means if a order gets executed in 5 trades due to order matching in exchange, brokerage of only one trade will be levied i.e. Rs.20)
Please note that, in case of Zerodha, these charges will remain Nil.
Trading brokerage (same for intraday or futures)
For trading let us assume that we buy Two lots of Scrip A (which at a value of 8500 and contract size of 25) will have a contract value of Rs. 8500 X 25 X 2= Rs.425,000
Brokerage paid to traditional broker = Rs.425,000 X .02% = Rs. 85 (Rs. Eighty Five only)
Brokerage paid to Discount broker = 1 Executed order X Rs.20 = Rs. 20 (Rs. Twenty only)
So we can see that even at lower of the rates with traditional brokers and even with low volumes, discount brokers are proven to be better priced.
Options Brokerage
In case of options, both traditional as well as discount charge on per lot basis. So it an apple to apple comparison. If your are getting rates above Rs. 20 per lot or you normally trade more than one lot in each trade or both of conditions, then discount broker will be proved to be cheaper.
Direct Impact on Trading costs
Seeing the calculations above, it is evident that you can save a lot of cost while trading when you are trading with discount brokers. Now let us see how this impacts us in our trades.
Let us assume, we wish to buy 100 units of Scrip A. To make it closer to real life, I am assuming that our existing broker charges Rs.50 per lot in options and discount brokers charges Rs. 20 per trade. When we buy Scrip A at 8500, the brokerage cost per Scrip A lot value will be as follows
For the ease of calculation of our breakeven point, we are nor assuming any other charges.
In case of Traditional broker –
100 Scrip A = 4 Lots of Scrip A, (considering 1 lot = 25 units)
So brokerage charges for buying will be 4 X 50 = 200 and for selling 4 X 50 = 200
Brokerage per Scrip A unit = {Buying brokerage + Selling brokerage} / 100 Scrip A unit
= {200 + 200}/100 = 4 points
So our breakeven point will be 4 points.
In case of Discount broker
Brokerage charges for buying will be Rs. 20 and for selling Rs.20
Brokerage per scrip A unit = {Buying brokerage + Selling brokerage} / 100 Scrip A units
= {20 + 20}/100 = 0.4 points
So our breakeven point will be 0.4 point which is less than 1 point Scrip A
Unlimited plan
Unlimited plans brings in a big advantage for large volume traders. So if your dealing with traditional broker and generally trade about 1000 Scrip A every day. You brokerage will be Rs.2000 per day which calculated for 20 days should come out as Rs. 40,000. What MyValuetrade is charging is just Rs.1000. (No, I haven’t missed any zeros, it is Rs. One thousand). So now you can trade any number of lots in amount of Rs. 1000 per month.
Please note that a trader should trade as per his or her style and should not increase or decrease trading with lower brokerage rates. We do not have any intention to impact on your style or encourage trading volumes. Hope you will like this article and give your views as comments. Do subscribe to our newsletter for more such insights.
