Broking charges for transactions in equity shares and derivatives are coming down with bank-owned stock-broking firms reducing their fees to match those of discount brokers or to even lower levels. Many bank-sponsored brokerages have also done away with an account-opening fee. The reduction comes at a time when trading across market-segments has slowed following tighter regulation.
HDFC Securities, SBICap Securities and Axis Securities are charging Rs 20, similar to fees of discount brokers like Zerodha, Groww and Samco. Kotak Securities now charges just Rs 10—the lowest for both intra-day orders and per order executed in the F&O market. Most large digital brokers charge Rs 20 per order for derivatives trades.
Race to the Bottom
While Zerodha does not charge a fee for delivery-based trades, it charges Rs 20 for intra-day and F&O orders. Firms like Angel One, 5Paisa, Groww, and Upstox charges a brokerage fee of Rs 20 across delivery, F&O, and intraday segments.
Shripal Shah, MD & CEO of Kotak Securities, said the firm’s revenue mix is fairly diversified, with derivatives not being a very large contributor. This, he explained, is unlike the mix of some large digital brokers where derivatives account for as much as 60–70% of revenues. The moderation in derivatives volumes has had a limited impact on the firm’s revenues, Shah said.
Revenue Diversification
Nilesh Sharma, ED and president of SAMCO Securities, believes that the move to trim broking charges is a survival strategy. Noting that banks want to retain customers, Sharma said the industry has realised that the competition is tough. “While there will still be a few full-service brokers, the industry always follows market leaders, so everybody will have to become discount brokers going ahead,” he said. He feels brokerages could rely more on other charges such as depository fees to boost revenues.
Dhiraj Relli, MD & CEO of HDFC Securities explained that with most brokers today offering comparable and mature trading platforms, pricing, trading charges have increasingly emerged as a key point of differentiation in the derivatives segment. “For a large section of clients, especially inactive users and new entrants, transaction costs meaningfully influence the decision to start or resume trading activity in the derivative trading world,” he said.
However, he feels pricing alone does not drive sustainable market share gains. Its impact is maximized when combined with a stable execution platform, enhanced features, strong risk-management frameworks, and continuous client education. Brokerages are focusing on research and analysis products to provide value-added services to their clients.
Data from the National Stock Exchange shows that discount brokers Groww, Zerodha, Angel One, and Upstox held 62% of the market share in terms of active clients in November as against 63% at the end of September.