Brokerage in the stock market refers to the fee or commission charged by a broker for executing buy and sell orders on behalf of investors. Broker acts as a bridge between an investor and the securities market and enables the facilitation of trades. In the Indian stock market, brokerages may vary based on factors like transaction volume, broker type and market segment.
Content:
- What are brokerage charges?
- Types Of Stock Brokers
- Difference Between Commission And Brokerage
- How To Calculate Brokerage
- Alice Blue Brokerage Charges
- What Is Brokerage In Stock Market – Quick Summary
- What Is Brokerage In Stock Market – FAQs
What is brokerage charges?
Brokerage charges are the fees that brokerage firms charge investors for helping them buy and sell stocks.
For example, let’s say you’re an investor named Rajesh. You want to buy 100 shares of a company. Each share costs ₹100. Your broker charges a flat fee of ₹15 for each transaction. If you buy the shares, your total cost would be ₹10,000 for the shares plus ₹15 for the brokerage fee, making it ₹10,015 in total. But if you’re trading with Alice Blue, you can enjoy zero brokerage on investments and a maximum of ₹15 for trading.
Types Of Stock Brokers
There are primarily three types of stock brokers that cater to the diverse needs of investors:
- Full-Service Brokers
- Discount Brokers
- Full-Service Brokers: Full-service brokers offer a comprehensive range of services tailored to meet the unique financial goals and requirements of individual investors. Services may include:
- Investment Advice: Providing personalized investment guidance and strategies.
- Portfolio Management: Managing clients’ investments actively to align with financial objectives.
- Research & Analysis: Offering insights, market research, and detailed analyses.
- Customer Support: Enhanced customer service and personalized attention.
- Discount Brokers: Discount brokers like Alice Blue are for those who prefer to manage their investments online. They provide a trading platform but at a much lower cost. For instance, Alice Blue charges zero brokerage on investments and a flat ₹15 for trading. The characteristics include:
- Lower Fees: Charging zero brokerage on investments and flat ₹15 per trade.
- Online Platforms: Providing user-friendly platforms for online trading.
- Limited Services: Less personalized advice or additional services.
| Type | Services | Fees | Target Audience |
| Full-Service Brokers | Comprehensive (Advice, Management, Research) | Higher | Investors seeking personalized support |
| Discount Brokers | Limited (Online Trading) | Lower | DIY, tech-savvy investors |
Difference Between Commission And Brokerage
The primary distinction between commission and brokerage is that commission is a general term for a fee earned for facilitating a sale or service, whereas brokerage is a fee for executing financial transactions, often in stock markets.
| Parameters | Commission | Brokerage |
| Nature | Commission is a fee that is paid to an agent or employee for transacting a piece of business or performing a service. | Brokerage is a specific charge paid to a broker for executing a financial transaction, often related to buying or selling securities. |
| Scope | The scope of commission is broad, covering various industries like real estate, sales, and more, and is not restricted to financial markets. | Brokerage is specific to financial markets and related transactions, particularly involving stocks, bonds, and other investment products. |
| Charge Basis | Commission can be charged as a fixed amount or as a percentage of the sale value, depending on the industry and agreement. | Brokerage often involves a mix of a flat fee and a percentage of the transaction value, providing flexibility in charging. |
| Service Offered | Commission is generally related to selling or marketing services, where an agent facilitates a sale or other business transaction. | Brokerage includes specialized services such as trading and investment advice, focusing on helping investors navigate financial markets. |
| Regulation | Regulation for commission varies by industry, with different laws and rules applicable based on the nature of the product or service. | Brokerage is heavily regulated by financial authorities like SEBI, ensuring compliance with laws related to securities and investment practices. |
| Relation to Client | The relationship between the client and the agent is more sales-oriented, focusing on completing a transaction. | A broker mainly provides a low-cost trading platform. Whereas the investor is usually self-directed, making their own trading decisions without personalized advice from the broker. It’s a DIY approach with lower fees. |
| Examples | Commission is commonly seen in real estate transactions, where an agent receives a fee for facilitating a property sale. | Stock market brokerage is a typical example, where fees are charged for buying and selling stocks or other financial instruments. |
How To Calculate Brokerage
The brokerage is calculated by multiplying the transaction value by the brokerage rate.
Brokerage = Transaction Value × Brokerage Rate
Let’s take an example to understand in a more simple way:
Suppose you’re selling stocks worth ₹2,00,000. Alice Blue’s Freedom15 Plan charges either ₹15 per executed order or 0.05% of the transaction value, whichever is lower.
- Flat Fee: ₹15
- Brokerage Rate: 0.05% of ₹2,00,000 = ₹100
Since the flat fee of ₹15 is lower than ₹100, you’d be charged ₹15 for this trade.
You can calculate your brokerage easily with AliceBlue’s Brokerage Calculator.
Alice Blue Brokerage Charges
Alice Blue offers a competitive brokerage plan known as Freedom15 (F15 Plan) that aims to minimize your trading costs. Most importantly, with Alice Blue’s 15 Rs brokerage plan, you can save up to ₹ 1100 brokerage every month, which is Rs 13,200 every year.
Below is a detailed breakdown of the brokerage charges under this plan.
Freedom15 (F15 Plan)
The Freedom15 plan allows you to trade in a variety of financial instruments, including stocks, currencies, commodities, options, and futures. The maximum brokerage fee you’ll pay for any trade is ₹15.
| Exchange | Segments | Brokerage |
| NSE, BSE | EQ Intraday | ₹15 per executed order or 0.05% whichever is lower |
| EQ Delivery | ₹0 | |
| FUT | ₹15 per executed order or 0.05% whichever is lower | |
| OPTION | ₹15 per executed order | |
| MCX | FUT | ₹15 per executed order or 0.05% whichever is lower |
| OPTION | ₹15 per executed order | |
| NSE, BSE | CURRENCY FUT | ₹15 per executed order or 0.05% whichever is lower |
| CURRENCY OPT | ₹15 per executed order | |
| NSE, BSE | Equity Delivery | ₹0 |
| MF (Mutual Funds) | ₹0 | |
| IPO | ₹0 |
The Freedom15 plan by Alice Blue offers a straightforward and cost-effective brokerage structure. Whether you’re trading equities, futures, options, or currencies, the maximum you’ll pay is ₹15 per executed order. This makes it an attractive option for traders looking to optimize their costs. In addition, With the Alice Blue Brokerage Calculator, you can figure out how much each trade will cost.
We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, commodity and hence we bring you the important topics and areas that you should know:
What Is Brokerage In Stock Market – Quick Summary
- Brokerage is the fee that a broker charges for buying and selling stocks in the stock market.
- Stock brokers are categorized into Full-Service & Discount Brokers. Full-Service Brokers offers a range of services including investment advice and discount brokers focus on low-cost trading.
- Brokerage is calculated as the product of transaction value and brokerage rate. It involves identifying the transaction value, determining the brokerage rate, and performing a simple multiplication.
- Start your investment journey at no cost with Alice Blue. Most importantly, with our 15 Rs brokerage plan, you can save up to 1100 Rs brokerage every month. We also don’t levy clearing charges.
What Is Brokerage In Stock Market – FAQs
What is a brokerage with an example?
Brokerage refers to the fee paid to a financial broker for executing trades and providing related services. For instance, Alice Blue a discount broker in India, charges zero brokerage and a flat rate of Rs 15 for executing a trade.
How is stock brokerage calculated?
- Transaction Value: Stock price multiplied by shares.
- Brokerage Rate: A percentage fee, like 0.05%.
- Calculate: Brokerage = Transaction Value × Brokerage Rate
What are the 3 types of brokerage accounts?
In the stock market, you’ll mainly deal with three types of accounts:
- Equity Account: For buying and selling shares.
- Derivative Account: For trading in futures and options.
- Demat Account: Holds your shares in electronic form.
What is the difference between a Demat account and brokerage account?
The main difference between Demant Account and Brokerage account is that Demat account holds securities in a dematerialized or electronic format, while a brokerage account is used to buy and sell those securities.
To understand the topic and get more information, please read the related stock market articles below.
