The stock broker is probably one of the most important financial intermediaries that you need to know. A stock broker is a corporate entity, registered as a trading member with the stock exchange and holds a stock broking license. They operate under the guidelines prescribed by SEBI.
A stock broker is your gateway to stock exchanges. To begin with, you need to open something called as a ‘Trading Account’ with a broker who meets your requirement. Your requirement could be as simple as the proximity between the broker’s office and your house. At the same time it can be as complicated as identifying a broker who can provide you a single platform using which you can transact across multiple exchanges across the world. At a later point we will discuss what these requirements could be and how to choose the right broker.
A trading account lets you carry financial transactions in the market. A trading account is an account with the broker which lets the investor to buy/sell securities.
So assuming you have a trading account - whenever you want to transact in the markets you need to interact with your broker. There are few standard ways through which you can interact with your broker.
1. You can go to the broker’s office and meet the dealer in the broker’s office and tell him what you wish to do. A dealer is an executive at the stock broker’s office who carries out these transactions on your behalf.
2. You can make a telephone call to your broker, identify yourself with your client code (account code) and place an order for your transaction. The dealer at the other end will execute the order for you and confirm the status of the same while you are still on the call.
3. Do it yourself – this is perhaps the most popular way of transacting in the markets. The broker gives you access to the market through software called ‘Trading Terminal’. After you login in to the trading terminal, you can view live price quotes from the market, and can also place orders yourself.
The basic services provided by the brokers includes :
1. Give you access to markets and letting you transact
2. Give you margins for trading – We will discuss this point at a later stage
3. Provide support – Dealing support if you have to call and trade. Software support if you have issues with the trading terminal
4. Issue contract notes for the transactions – A contract note is a written confirmation detailing the transactions you have carried out during the day
5. Facilitate the fund transfer between your trading and bank account
6. Provide you with a back office login – using which you can see the summary of your account
7. The broker charges a fee for the services that he provides called the ‘brokerage charge’ or just brokerage. The brokerage rates vary, and its up to you to find a broker who strikes a balance between the fee he collects versus the services he provides.
0 comments:
Post a Comment