An Analysis of Future Prospects of Traditional Brokerage System with the Emergence of Online Discount Brokerage System in India.

Finance

The purpose of this paper was to dwell into the future prospects of traditional brokers and broking firms with the emergence of discount broking. Traditionally stock trading is done through brokers in the stock market, either personally or through phone call. As a result of enormous Increase in number of people trading in stock market in last few years, the brokers and broking firms started facing issues like location constrains, busy phone lines, miss communication, etc. Information technology in this sector like the stock market softwares helps stock brokers in solving these problems with Online Stock Trading. The rise of millennial investors who are tech savvy found online trading platforms easier and efficient to work on. Investors can trade shares through a website without any manual intervention from Stock brokers. Moreover Indian investors have always been price conscious. Discount brokers in India have capitalised on this trait by charging a flat fee (nominal charges) for transactions. They are able to pull this off as discount brokers provide all their services online and don’t offer investment advice that requires maintaining a team of qualified analysts therefore saving on overheads. This benefit is passed to consumers in the form of reduction in costs. Brokerage houses have realised broking income will go on reducing in a gradual fashion as India's broking industry is moving towards zero to nil commission era. Therefore, threat to big broking firms seems to be very real. The aim of this research was to study this general notion in detail to find out the ways (Positive or negative) in which online discount broking affects the future of traditional broking in India through various secondary and primary sources of data like personal interview with stock brokers, articles and guidelines published by the regulatory body of SEBI, articles published by finance experts in different forms of media. It was observed that the traditional or full-service broking system is not going to vanish anytime soon and is here to stay in the market individually as well as in a cohesive manner with the online discount broking system.

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