Traders and investors can start online share trading in India through 2 major Stock exchanges.
One can buy and sell shares through Stock Brokers, Banks & Financial Institutions registered with one of these stock exchanges.
Types of online share trading companies in India
There are two types of online brokers or trading companies in India
Full Service Brokers
Most of the stock brokers in India are full-service brokers.
They provide Brokerage and trading platform to trade Stocks, Futures, Options, Commodities, Currency, Mutual Funds etc…
These full service brokers provide 3-in-1 account which includes trading account, demat account and bank account.
In addition, they provide plethora of services like research reports, advisory and a relationship manager to help you advise you with your trades.
Besides helping traders buy and sell shares, they also offer a wide range of products like
- Mutual Funds
- IPO
- Debt
- Insurance
- Loans
- Financial Planning
- Wealth Management
This explains why their brokerage charges are higher than Discount brokers.
Few Top Full Service Brokers in India are
- ICICI Direct
- Kotak Securities Ltd
- HDFC Securities Ltd
- Motilal Oswal
- IIFL Securities Ltd
- Angel Broking
- Share Khan
- Axis Direct
- SBI Securities.
Discount Brokers
Discount brokers have been rapidly growing at a very fast pace in India.
The discount brokers are online stock brokers who usually charge discounted brokerage than full service brokers.
2 things that make Discount Brokers so popular in India
Firstly, it is Brokerage.
Discount Brokers charge nominal brokerage, either fixed price per trade or fixed monthly fees for unlimited trades.
Secondly, Technology
These brokers focus majorly on technology in order to build a low operational cost business. They provide powerful high speed trading platforms, charting software, powerful Analytical tools
Today’s youngsters in India are very hands on with new technology. As a result, these young traders prefer discount brokers who has technological advantage than Full Service Brokers
So, What could be of any disadvantage of using Discount Brokers?
Discount Brokers do not provide the entire gamut of services like “Full Service Brokers”.
However, today’s trader does not require these full plethora of services. Hence, they do no feel less privilege by not opting for Full Service Brokers.
Some popular names of Discount traders in India
- Zerodha
- Upstox
- Groww
- 5paisa
- Alice Blue
- SAMCO
Online share trading pre-requisites
You would require 3 accounts for Online share trading in India,
1. Demat Account:
Physical shares cannot be traded. A Demat account is required to hold your shares in dematerialized electronic form, instead of cash.
A Demat account can be opened through most banks and financial institutions.
One has to fill up the required forms and provide identity and address proofs.
2. Trading Account:
In addition to the Demat account, you would also need a trading account to actually carry out your trades.
3. Bank Account:
A Bank account needs to be linked with your trading account.
One can easily transfer or withdraw money from your account with this bank account.
Documents required to open share trading account in India
These are the few documents required to open share trading account in India
Proof of Residence
- Aadhar Card
- Passport
- Voter Id
- Ration Card
- Driving License
- Bank Account Statement
- Utility Bills (Telephone, Electricity etc..)
- Proof of address attested by bank managers of scheduled banks, scheduled co-operative banks, gazette officer, notary public, elected representatives of legislative assemblies (MLAs), elected members of parliament (MPs)
Proof of Identity
- Aadhar Card
- PAN Card
- Passport
- Driving License
- Voter Id
- Any Card issued by State / Central Government
- Any Document with Applicant’s photo, attested by
- Central or State Government and its departments
- Statutory/ Regulatory bodies
- Public Sector Undertakings (PSU companies)
- Scheduled commercial banks or public financial companies
- Universities / Colleges affiliated to universities
- Member IDs professional bodies like ICAI, ICWAI, ICSI, Bar Council among others can issue for their members.
Proof of Income
- A photocopy of the Income Tax Return (ITR) acknowledgement slip submitted to the Income Tax Department during filing of income tax
- Bank Statement for last 6 months
- In case of Salaried Individual – Salary Slip or Form 16
- A Net Worth Certificate certified by a Chartered Accountant
- A statement of Demat account holdings with an eligible Depository Participant
- Cancelled personalized cheque
- Documents to substantiate ownership of assets.
After choosing a broker and completing Demat account opening process, you’ll need to fill out a registration form for KYC (Know your Customer Document).
The documents given while opening Demat account would be used again to validate KYC
