InvestorQ : How much of an impact are the discount brokers making in the Indian broking industry?
Arti Chavan made post

How much of an impact are the discount brokers making in the Indian broking industry?

Rutuja Nigam answered.
3 years ago

For a long time in India, discount brokers operated in the periphery of the broking industry. That was partly due to relations build by large brokers and partly due to the shortcomings in technology that did not permit an online / app only model. That has changed.

Discount brokers are making a real comeback in the last few years. The largest broker in India by number of clients has been Zerodha for a long time. Now, RKSV which runs Upstox platform has emerged as the second largest brokerage in terms of number of clients.

One trend appears to be that the discount brokerages are getting the better of traditional full-service brokerages in terms of client accretion and overall market share. RKSV Securities of the Upstox platform doubled its registered customers to 1.2 million during the pandemic.

During this pandemic period, leading traditional brokers like ICICI Securities and HDFC Securities hardly saw any client accretion and even lost incremental clients to the discount broking names. ICRA has projected broking revenues to touch Rs.23,000 crore in FY21.

In the last few years, discount brokers have appealed to the young and mobile populations with their low cost and high speed trading models. ICRA even anticipates that most of the additional brokerage revenues could flow into the coffers of discount brokers.

Now the low cost broking industry is seeing a shake up with the likes of Paytm also entering the stock broking fray. While it is not clear if these will be profitable models, they surely have the potential to disrupt the industry.