SASTA AUR KHATARNAK!
Beware of Low-Cost Brokerage Firms.
Off-late we have seen huge number of new brokerage firms opening up and offering low cost brokerages like Rs 9 per trade/Rs 20 per trade e.t.c.
But have you ever thought, If big brokerage houses who still charge small investors 40 paise in Delivery & 4 paise in Intraday (of course negotiable depending on your volume) have been in financial distress then how on earth will such a low profit business model of these small-timers will last and who gives the guarantee that your money is safe?
Few weeks ago some of our friends had an issue with their broker, That particular broker was not issuing the payout to a lot of clients and not even helping with client master so that he can link his DP to another broker, All their customer care helpline nos. were not working and Relationship Managers were not picking up the phone, And when someone managed to talk they gave lame excuses like signature mismatch issue among the partners and e.t.c. That brokerage firm of the NCR zone is into real estate business too and have a pathetic track record, Now we come to know that some of them have got the payout and some are still worried and thinking about filing a FIR which we suggested them to do, There has been ZERO media coverage on this particular issue and no one is noticing the BIG DEAL it is.
Now imagine you open a new trading a/c with a low cost brokerage house named e.g. (ABC)
ABC has offered you 1paise and 10paise and you fall for it and give them the margin of INR 1lakh.
After few months/years you are unable to take a payout, and your broker is not picking up your phone.
You write a mail and no one is responding, Your broker who offered ridiculously low brokerage has not been able to sustain this business model and is now in huge losses or his intentions are malicious.
There is loss in his other ventures, This guy has lost a lot of money and it is you who has to suffer the side-effects of his bad business decisions, You try everything and finally you file a case, Courts orders SEBI to set up a committee, few prominent politicians have raised voice for your votes, There are few months of inquiry but your money is still far away from you, Finally you will get it back after few months/year, But was the low brokerage worth the risk?
Always go for reputed brokerage houses which have a good promoter backing, Low brokerage is very HOT but sustainable? totally NOT, It is better to bargain/negotiate with your broker and bring your brokerage down significantly rather than taking the risk of trusting the newbies.
Promoter is an important part when you trust someone for your money... so make a wise decision!
Cheers