Stockbroker - Overview, Responsibilities, Types, Qualifications

Investing in Stocks happens through stock exchanges. The companies offering their shares get listed here to facilitate trading. You do this through India’s two major exchanges: the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). But this does not go through directly. You need an intermediary to trade in the Stock Market. This is where stockbrokers come in. 

They conduct Online Trading on your behalf. They include a stockbroking firm, an independent company, or a person.  Regardless of the status, the Securities and Exchange Board of India regulates them to provide the service. They get to charge a commission or a fee in exchange. Since they act as a medium to buy and sell shares in the Stock Market, you should understand their role thoroughly before trading. Find the details for the same as follows: 

Classification

To learn about the role of Stockbrokers, it is essential to understand the two main types. This classification depends on the kind of services provided. Also, the suitability differs accordingly. Once you know this, choosing the right broker to open a Demat Account becomes easy. Find the categorisation as follows: 

  1. Full-service: Stockbrokers here provide full-fledged services. They focus on equipping you with all the tools required for a smooth trading journey. Hence, they are ideal if you are a beginner. You get assistance for financial planning, asset management, making trade decisions, etc. For this, such institutions offer research reports and analytical recommendations. 
  1. Discount: If you have substantial knowledge about the Stock Market and trading, you should go with discount brokers. Instead of additional services, they give you a trading platform. This enables you to trade efficiently. Also, they charge relatively lower commissions. Although they do not focus on assistance, you get access to research tools and indicators for making informed trading decisions. 

Both categories have distinct benefits. The former is ideal for beginners, while the latter is apt for experienced traders. The cost of services also varies significantly. This reflects in the Demat Account opening charges. Hence, you should consider your requirements and budget while choosing between the two. 

Services

The next aspect that clarifies the importance of Stockbrokers is the services. You want to understand this carefully to trade efficiently. It is also a dealbreaker in choosing the right broker. Besides facilitating buying and selling of shares, brokers also offer a range of services. These provisions help you in making trading decisions and improving your portfolio strength. Some of the necessary facilities include:

  1. Demat and Trading Account: These two accounts are mandatory to trade in the Stock Market. A Demat Account stores your securities in an electronic form. It assists in keeping track of your holdings. With the advent of technology, you can open a Demat Account online. 

Similarly, Trading Account is also crucial for entering the Stock Market. It is the link between the Demat Account and Bank Account. When you want to buy or sell shares, you place an order through Trading Account. It facilitates the trading transaction. 

  1. Financial planning tools: Whether you plan to trade or invest, you need a plan. This helps in achieving your financial goals and streamlining wealth growth. Stockbrokers understand this and equip you with resources for financial planning. They share information on short- and long-term stocks based on varied risk profiles. They also have resources like webinars, blogs, and reports to guide you. 
  1. Portfolio analysis: You need the expertise to become a successful trader. However, it takes time to reach that level. Therefore, mistakes are bound to happen. You get to avoid them by carefully analysing your portfolio. A volatile market swings in any direction. A seemingly bullish or bearish market may overturn anytime. In such situations, brokers come to your rescue with portfolio analytics. 
  1. Advisory services: The stockbrokers have access to reports showing the Stock Market functioning, trends, performance, etc. Also, they have a database and research to back this information. Hence, they can offer advisory services. They do this through the Online Trading app and platform. You study the reports and make an informed decision.
  1. Share Trading tips: Besides the general reports educating you about the market conditions, you also get tailored recommendations. You get stock performance indicators when you maintain your app and platform. Accordingly, you get recommendations to strengthen your portfolio. However, such personalised tips are mainly available through full-service brokers only. 
  1. Trading Platform: This is where the Trading decisions are effective. Since most brokers have shifted online, you can do transactions through trading platforms. These portals come with a good user experience and seamless connectivity. The best trading platforms include essential features like real-time quotes, charting tools, research reports, news feeds, blogs, etc. 
  1. Customer support: Although trading online gives you efficiency, it may become challenging for some people. Stockbrokers understand this and offer means for assistance. It includes detailed instructions and blogs for learning. But additionally, you also get quality customer support. This helps you get immediate assistance with your queries, complaints, or technical problems. 
  2. Banking services: Typically, banks and fund houses provide stockbroking services. If you choose the former, you can avail of banking services. Depending on the bank, you also get a 3-in-1 Account connecting your Bank, Demat, and Trading Account. Hence, you make deposits, hold shares, and trade them in one place. 

The facilities mentioned make it easier for anyone to start their trading journey seamlessly. You only need to understand the required services based on your financial goals, risk appetite, budget, and convenience. For this, fund houses and banks provide detailed information on their websites. Refer to the same for selecting a stockbroker. 

Also, check the reputation and regulating authorities to protect your interests. This is crucial as there are many stockbrokers in the market. You want to settle with a trusted source and fair terms.