Who is the broker? What role do they play? And how to choose one?

In a developing market like India, it is essential to choose your broker wisely. Choosing a stock broker is also extremely important based on the services and facilities they offer.

What is a broker?

A broker is an entity that serves as the mediator between the Trader/ Investor and stocks exchange. In layman words, a broker is a person who buys and sells on behalf of others. In stock market, a broker is an individual or a firm that places the 'buy' and 'sell' orders on behalf of the investor for a fee and commission basis. Please note that at no point in time the broker holds or owns the shares.

What is the role of the broker?

Broker Place buys and sells shares or other financial products. When you trade through the broker, in that case, you are allowing the broker to buy or sell the share on behalf of the client. In return for that broker charges brokerage fees based on the percentage turnover of the trade value.

In India, stock brokers are registered and governed by the Security Exchange Board of India (SEBI) and should obtain memberships of any exchange such as NSE and BSE that it wants to offer trading services on to its clients.

Function of brokerage firm.

Order execution: Brokers execute their client order through an online platform by charging the brokerage a commission which depends upon the turnover of the trade value.

Trading Platforms: Brokers provide multiple platforms so that clients can place the order very easily on platforms that can provide such as trading apps and software for smartphones, laptops, and tablets.

Financial advisory: In this case, when a stockbroker provides the recommendation of the stocks or any sector-specific, all the recommendations should be transparent about the risks.

Margin financing: The client who has their account with the large broker. In such cases, large brokers provide margin funding facilities to the trader so that they can take a large position in the market.

How to choose a stockbroker?

Choosing a stockbroker is dependent upon those that meet your needs, such as personal and financial.

1. Customer Feedbacks: This would depend on the user's reviews while using the platforms of different brokers. This would completely depend upon comments which are given by their existing clients.

2. By checking the past performance: It depends upon, by checking the past performance of the broker about their services while comparing with other brokers online agencies.

3. Gather feedback: For this, you have to talk to your friend and family who have already invested in the stock market. Talk to family and friends who have invested through a particular broker and ask about their experience.

4. Brokerage charges: Brokerage charge is one of the most important factors while deciding your broker. A discount broker and Robo-advisors charge a nominal fee for their services, while a full-service broker charges high fees but also offers a wide range of services. Compare the charges and facilities available, and then choose your broker wisely.

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