About Discount Broking!

What is Discount Broking ?

SAMCO is India’s leading online discount broker which offers flat fee online trading at Rs. 20/transaction. No conditions apply!

We're putting out some information for the benefit of those who do not understand what is a discount brokerage and how it works.

What is a Discount Brokerage?

A Discount Broker vice-versa a traditional broker offers plain vanilla trading services to its customers at a rate which is significantly lower than traditional full-service brokers. This is possible due to a lean organisation structure, technology driven business model and unbundling of services which help the customer pick and chose solutions at a price that works for them. Since the Brokerage charges of these brokers are lower than others, these are called "Discount Brokers"

How did the concept of discount broking emerge?

On 1st May, 1975, the SEC (Securities Market regulator) in the US permitted free market commission rates for stock trading transactions. Enter - Charles Schwab which aligned it’s business to the new regulations and went on to setup one of the World’s largest discount brokerage firms.

How do discount brokerages like SAMCO charge fees and how are they different from traditional full service brokers?

Discount brokers like SAMCO charge a flat fee on the number of transactions or executed orders unlike full service brokers who charge a fee on the value of each transaction.

Let’s take an example to explain this better. Let’s say you wanted to place an order for 1000 units of NIFTY Futures and your friend wanted to place an order for 5000 units of NIFTY Futures. You both called your broker-dealer who placed the order which got executed. The amount of effort required for your broker-dealer to place the order does not change for a 1000 unit or 5000 unit order yet the brokerage charged would be Rs. 2,400 (For you) and Rs. 12,000 (For your friend). Despite the amount of effort involved being the same – your friend paid 5 times the brokerage that you paid and you paid 120 times the brokerage that would have been paid by a SAMCO Client.

In Today’s technology driven world, the cost of executing transactions for a broker is extremely low and discount brokers like SAMCO have unbundled complex brokerage services to pass on the cost benefits to customers by lowering the brokerage costs per transaction.

What are the services that I don’t get with a discount broker like SAMCO?

SAMCO offers advanced trading terminals, standardised margins, research and other value added services like Stock Data Bank, etc. SAMCO is India’s first discount broker to offer additional research tools, ratings and data sets to help customers research stocks.

However unlike a full service traditional broker, SAMCO doesn’t offer trading tips or a dedicated relationship manager.

  SAMCO - A Discount Broker Traditional Full Service Brokers
Brokerage Flat Fee Trading irrespective of order value Percentage Brokerage applicable on value of transaction
Options Brokerage Appliable on Executed Order Applicable per Lot
Minimum Brokerage In case of small trades, brokerage applicable is 0.2% (Delivery) / 0.02% (Intraday or Derivatives) or Rs. 20 – Whichever is lower Minimum per share or Per Transaction Value: Usually have a minimum per share charge or minimum fee per contract
Margin Policies Standardised margin policies Relationship-based Margin Policies - Adhoc margin policies that vary from client to client
Branches No Branches Available Branches are available for offline physical support
Free Tips Not available Usually available
Dedicated Relationship Manager No dedicated RM support For High-Net Worth clients
Comparison between SAMCO and Traditional Full Service Brokers

What is an Executed Order and how do I get charged in case of trading with SAMCO?

We are often asked – how does Rs. 20/transaction (or Per Executed Order) work. What happens in case of multiple trades for a single order? What if an order doesn’t get traded at all – do I still get charged? How do brokerage charges apply with discount brokers in india?

The answers to these questions are as under:

  • An Order which gets executed either fully or partially is called an executed order. It doesn’t matter if an order of 900 Nifty for executed in 12 trades of 75 units each. It still counts as one executed order since it was only one order that got executed in multiple trades. With SAMCO, Ek Order Ke Ho Chahe Anek Trade – Aapki Brokerage Hogi Sirf 20 Rupay!
  • If your order doesn’t get traded, that means it’s not an executed order. Since it’s not an executed order, you do not get charged at all.

How does SAMCO operate it’s business model and survive with such a low brokerage fee?

SAMCO is a technology driven business model with technology at the forefront of its business operations. Our constant endeavour and vision is to be the best online discount broker in India and continously drive fin-tech innovation to enhance a customers wealth creating and trading experience. In the process, we have built a lean, agile and dynamic customer-centric organisation with low overhead costs (such as branches, expensive relationship managers, etc) which allows us to operate at low costs and be profitable even by offering these low brokerage charges. Also one of the largest costs for a traditional full-service broker are commission expenses that are paid to intermediaries like Authorised Person or Sub-Brokers. In an increasingly online world, access to the markets for customers is now direct and this direct access has allowed us to eliminate the intermediation costs of offering these services and completely pass on the benefit to the customer.

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