Zero brokerage trading might be a recent buzzword you may have heard about. It is a new way of running the brokerage business and model. Here’s an outline of some of the ways in which brokerage firms work:
Traditionally, stock brokers made money by charging you brokerage every time you place a trade. This amount of brokerage varied depending on the size of the order that was traded.
E.g: If you bought 5 lots of NIFTY, you would be charged 5 times as much as if you bought 1 lot of NIFTY. This might make sense for the broker, but doesn’t make sense for the consumer.
Zero brokerage models exist to change the traditional structure. The broker eliminates scaling charges by doing either one of the following:
Offering ZERO brokerage on Equity delivery trading. This is a very attractive for Investors. Charging a flat fee per order traded. For extremely small orders, there is a percentage brokerage system.
Customers switching to a zero brokerage firm such as Upstox can benefit from features such as:
The first and foremost effect of this model is that the trader saves more money with a zero brokerage model than a traditional firm. Apart from that customers have also started to trust the brokerage industry.