All You Need to Know about Available Brokerage Options | Motilal Oswal

All You Need to Know about Available Brokerage Options




For smart trading, having complete knowledge of charges is necessary. Let's study brokerage charges.

What are brokerage charges, and why do you have to pay them?

Brokerage is what brokers charge for executing your transactions on the stock exchange.

These are the main income sources for brokers to pay for their operational expenses. They include fees for trade execution, settlement, research, and advisory services.

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How are brokerage charges calculated?

Brokerage charges vary among brokers and depend on the type of transactions made. For Motilal Oswal, the brokerage rates are as follows:

  • Intraday trading charges of 0.02% of the transaction volume
  • Delivery charges of 0.2% of the trading volume
  • Options trading charges of Rs 20 per lot

The charges are calculated as a percentage of the total cost of shares bought or sold.

Why is there a difference in brokerage for equity and futures trading?

  • Equity trades are charged based on the actual value of the transaction.
  • Futures trades are charged based on the notional value, which can make the brokerage seem lower.

What are per lot brokerages in futures and options trading?

This arrangement simplifies calculations for traders by providing a fixed brokerage per lot size defined by the exchange.

What are the types of brokerage plans available?

  • Full-Service Brokers offer all-around services like research and advisory services, charging higher brokerage rates.
  • Discount Brokers provide just the execution of trades with lower brokerage charges but no additional services.

Do all clients pay the same brokerage charges?

No, not all clients pay the same brokerage. The brokerage rates depend on your trading volumes and relationship with the broker. Consequently, larger trading volumes can result in lower fees and vice versa.

Can you negotiate brokerage rates?

Yes, brokerage rates are negotiable. If you are a frequent trader and your trading volumes exceed expectations, you can negotiate with your broker for lower brokerage charges. However, read and understand the rates outlined in your client agreement first.

What are the other charges involved in trading?

Apart from brokerage, the additional costs include:

  • Transaction Charges imposed by stock exchanges
  • Securities Transaction Charges (STT) based on the value of securities traded
  • Commodity Transaction Charges for commodity derivatives
  • Stamp Duty charged by the respective state government for securities transactions
  • Goods and Service Tax (GST) at 18% on transaction charges and brokerage costs
  • SEBI Turnover Fees for trading across various securities

Final thoughts

When it comes to deciding on the right brokerage option, determine your trading needs and frequency.

 

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