Hello
@john302928, Good question. First of all, I'd like to let you know that even
bank deposits are not guaranteed by the government beyond a sum of ₹1,00,000/- . So the perception that your money is safe in your savings bank/fixed deposit is by the virtue of RBI regulations and the fact that the banking industry has not gone bankrupt. Also, to safeguard the faith in the system, whenever a bank is stressed or in deep trouble, larger banks acquire them thereby providing immunity to deposit holders. Otherwise, deposit holders would be exposed to the risk of banks going broke too.
Stockbrokers are tightly regulated by SEBI, the exchanges & Depositories
(Regulated by SEBI & monitored/overseen by the exchanges & the concerned Depository). You may say that they can go absconding or bankrupt but that can happen with a bank too. A case in point is Amanat Co-operative Bank. At the end of the day, the integrity of the brokerage matters. At FYERS, client deposits are safely stored without using it for any speculative/untoward activities which can jeopardize the value of your deposits. We follow compliance to the highest standards and have been routinely audited by NSE compliance team who are very strict about these things. Also, an additional element of safety if you choose us, is that we don't do any kind of prop-trading activities. It means that there is a zero chance of us being exposed to financial indiscipline in that regard. Why don't we do prop-trading? To avoid conflict of interest with clients. Many professional and serious traders do not like to trade with brokers who are also taking positions on their prop book. This is because these brokers have access to the order/trade book and there is a chance for front-running of trades. Although this may or may not happen, it is a concern that goes silently unexpressed by most of them because there is barely any broker who refrains from prop trading.
Another important thing to consider is the risk management practices of a broker. If a broker is giving unreasonably high leverage, then they are exposing themselves. We don't do this. As you already know by now that we are conservative about providing unreasonable leverage and our systems will be able to manage volatility without jeopardizing ourselves. We are in this for the long haul and we don't believe in taking unworthy risks if that is your concern. Apart from that, your investment in shares is in custody of the depository (CDSL/NSDL) as the case may be. So even if the broker goes bankrupt, your holdings will not be affected.
However, if you still are concerned about losing your deposit, then I suggest you start small. Also, you can take payouts whenever you want. So when you feel like you're not going to trade, you don't have to leave your deposits overnight. Hope this makes sense.