InvestorQ : Can you tell me about Fisdom’s proposed subscription based broking? What does it mean for brokers?
vaishnavi mhatre made post

Can you tell me about Fisdom’s proposed subscription based broking? What does it mean for brokers?

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vidhya Laxmi answered.
2 months ago
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Fisdom announced its entry into stock broking during the week. It is planning to go largely subscription based. The idea will be to focus on aggressive traders, that aggressively churns the money and execute a number of multiple transactions at very narrow spreads. For them, Fisdom will offer subscription-based model, wherein a fixed amount will be charged each month facilitating unlimited transactions. IT is meant to attract churners of money.

The subscription model is essentially a low-cost model but differs from zero-cost or low-cost broking. That is because, in the low-cost model of brokers like Zerodha, Upstox and 5paisa, the aggressive traders actually subsidize delivery traders. Fisdom subscription model will be targeted at encouraging the aggressive traders while having a low cost model available to others too. Aggressive traders can churn aggressively and only pay statutory charges extra.

In the last few years, the offering gap between full-service brokers and low-cost broker is narrowing. For example, Fisdom will offer research on 3500 companies with appropriate screeners to shortlist stocks. Full service brokers have to really show value addition. But there is a risk in the Fisdom type of model. Its success predicates on low costs and steady stream of customers. Once markets get volatile, the customer flow can reverse fast.
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