Selecting a broker


Yesterday I had placed an After-Market Order (AMO) from my Zerodha and ICICIDirect accounts. Both at the same time, same price and same quantity. Today when I checked both at 9.50AM, my ICICIdirect account shows the order as executed, while the Kite (Zerodha) shows the order as rejected.

Has anyone else experienced difference in execution capabilities by different brokers?

The Status message shown on Zerodha (Kite) is:
rms:rule: check circuit limit including square off order exceeds for entity account-zl*** across exchange across segment across product*

(Gaurav Agarwal) #368

(Sarvesh Gupta) #369

Choosing a broker depends on individual conditions:

  1. For someone who is a heavy trader and speculates a lot - it is vital or rather most important to choose a Zerodha type discount broker.

  2. It doesn’t make any sense for anyone regardless of trading volumes or income to go with Banks related brokers like ICICI direct and HDFC sec, Kotak etc. - these just rip you off no matter how much you trade. Even if one pays 10k per year in brokerage - why even pay that when one can conveniently pay nothing with a ZERODHA type broker. I am surprised that someone like HDFC Securities refuse to charge less than 0.5% + GST which is almost 0.6% each way. This is just daylight robbery.

  3. In between there are guys who are desirous of maybe a better service and have mediocre volumes - they should again select either Zerodha type broker (depending on how much sensitive to brokerage they are) or a standalone broker who is charging them a maximum of 0.25% each way. Anything beyond that is ridiculous and hurts compounding tremendously in the long run.

  4. Research which brokerage houses provide to retail participants in my opinion is not worth any more than the waste in garbage bin that it needs to be thrown into. Most of the research done by brokers anyways, institutional or retail, is anyways glorified FIR report than incisive analysis and is frequently (or rather frequently and deliberatly if you know what I mean) ill-timed as well. If one assigns equal investment dollars to each of their buy recommendations, then I can bet such an investment strategy will never even create 1% alpha in the long term. I can maybe write a book on this point but enough discourse. So getting attracted to a broker because of research is not the right thing to do.

  5. All these talks about occasional glitches in tech etc. with discount brokerages are not that useful. The problems, if any and at the most not often, will pale in comparison to the big benefit of extremely low or zero brokerages for any logical investor who wishes to compound his capital.

Sarvesh Gupta

(Vineet ) #370

I am using ICICI direct since last 4-5 years and recently opened an account with Yes securities through my HUF. I am a investor and not a trader. ICICI direct is very user friendly and one-stop shop for everything showing my MF and stock portfolio. It givens Pie chart of asset and sector allocation. OFS (Offer for sale), bonds and MF SIP can be bought on the same platform. P and L statement can be downloaded very easily. I can make the difference between Yes securities which is still evolving with not so user-friendly interface. I complained to them and was informed that they are rectifying and revamping the whole interface. Regarding brokerage, in both demat account, I have enrolled in pre-paid brokerage option which has reduced my brokerage to 25% (albeit at some price). I do not follow the stocks tips and recommendations so these things do not matter to me. I had opened a Zerodha account but never used it since nobody from Zerodha visited me for a demo after opening and response was not good . (My views may be biased)

(Sarvesh Gupta) #371

Zerodha and other discount brokers will never visit - basically it’s a diy model (do it yourself) which is necessary to keep the costs low and pass on benefits to customers which they do.

I wonder what hand holding is required to simply buy or sell shares on a Zerodha type of platform. If one can operate icici Sec then one can operate Zerodha Type platform as well.

P&L and other standard mathematics calculations are available with Zerodha as well - so is applying for offer for sale or buybacks. IPO one can anyways apply through banking portal and just need to punch in some details.

Infact, here is the secret - for all those buying mutual funds if you buy a mf from say icici Sec you can’t buy direct option and only buy regular option and end up paying unnecessarily 1% commission (every year!!)unnecessarily to icici Sec or HDFC Sec as the case maybe. Zerodha on the other hand provides direct mf buying as far as I know - although I haven’t bought any mf in my life.

The choice is very simple, there is no reason other than lethargy maybe to go for a bank broker. And that’s the reason why Zerodha is the largest retail broker now.

Ps - I have no self interest in promoting any discount broker but it pains me to see so many gullible investors pay so much brokerage unnecessarily when better options exist.

(gautham1) #372

Hi guys,
I am not a trader. I love zerodha because of their UI and zero brokerage. I hear some remarks that these discount brokers are primarily meant for traders. Even their sms’s start with "Dear traders,… ":slight_smile:
Do you guys see any risk if the portfolio is large? ( say > 1 cr) . For large portfolios should one stick to the platforms from the big banks like icici, kotak etc?

(vij) #373

For me, yes @gautham1 … my LT holdings are north of that and distributed among two big bank brokers… I’m only comfortable doing smaller trades on zerodha. It may just be my mental conditioning but I wouldn’t be able to sleep if I had it all with one discount broker.

Finally il say this: if we wouldn’t invest all our funds in one micro cap, we shouldn’t be putting all equity investments with a discount broker too.

Mutual funds, I buy direct from mutual fund websites.

(Yogesh Sane) #374

Custodian is one option but they cost a lot. Few custodians told me that they are not taking individuals as clients.
I have explaexplained my set up here.

With this set up you hold your shares in a big bank demat but trade using Zerodha. You get security of a big bank and avoid giving a POA to the bank along with low cost of a discount broker.

(Roy) #375

The holdings are with the depository (NSDL/CDSL), not with the discount broker. Although it is possible that the discount broker could sell your holdings without your consent because of the POA you signed, the proceeds from the sale can only be transferred to the linked bank account. Looks pretty safe to me.

(vaibhav) #376

Please confirm that speed-e share transfer from 1 demat to the other happens instantly.

(gautham1) #377

thanks @Yogesh_s @peepin2me .
I was actualy thinking on the same lines as @peepin2me. The only major risk is your broker failing to do fund transfer to the the linked account.
@Yogesh_s do you see any flaw in this assumption?

(Yogesh Sane) #378

No it doesn’t. Also Zerodha runs a nightly job so shares received in your demat account with Zerodha can only be sold the next day. Usually there is a cutoff of 4 pm so you have to initiate transfer before 4 pm to sell it the next day.

(Yogesh Sane) #379

This is possible. How likely it is is based on the internal control system implemented by the broker. Even with my arrangement, this risk is there but it will be limited to only the transaction you initiated. In normal course, your demat with discount broker will be empty. So your entire holding will not be in an account where the broker has a POA.

Ideally you should try to separate execution and custody with two separate entities.Even the custody part should be divided among 3 to 4 DPs.

(Vineet ) #380

(Gaurav Agarwal) #381

Hi @Yogesh_s

Is this process of requesting a transfer from Client Beneficiary Account to Demat account online or do you have to send a request by post each time?

How difficult and cumbersome is the process?

On separate note, how do you judge IB on transparency, ethical conduct and customer service parameters?

Thanks for your time.

(Yogesh Sane) #382

It is online but I used to fill a stock transfer request PDF form, print, sign, scan and upload it once a quarter to request the transfer. You can do it for every buy order but that will be tedious. However, on occasions they would transfer shares if I raise online ticket from their backoffice website with the required details.

I think IB is good on transparency, never had any issue with ethics, and their customer service is excellent (CS reps are knowledgeable and efficient, never had to explain anything twice).

They don’t trade on BSE so that was an issue for me as some stocks trade only on BSE. Had to use another broker. they also don’t let you trade NSE stocks other than EQ series. Occasionally some stocks would get transferred to BE series and could not buy those. I could sell those by calling them but not online. I think all these restrictions is because of margin account. They wont allow SME as well as these are not EQ series.
Recheck these details as I closed my account more than a year ago and things may have changed.

Also tender offers and OFS was not through their trader workstation but through online ticket.

(Gaurav Agarwal) #383

Thanks for reply.

Can you give some examples of script in NSE BE segment?

Also, is sending money via Internet banking similar to other Discount Brokers?

(Yogesh Sane) #384

BE segment is for stocks in the trade-to-trade segment.
deposit and withdrawal is via NEFT/RTGS. Not sure if they accept IMPS.

(Roy) #385

Are there any good alternatives to Zerodha; with brokerage rates being on par with Zerodha but with a more reliable, glitch-free trading interface and a better, fully functional backoffice (Zerodha’s Q backoffice is useless and never works)?

(Raj) #386

You can check upstox (RKSV). IMHO their trading platform /app and customer service is v good.