Stock Broker

Stock Broker – Importance, Overview, Types and Responsibilities

A stock broker is an intermediary who enables buying and selling of stocks and securities in a stock exchange on behalf of financial institutions and firms. Needless to say, all the stocks are traded through major stock exchanges. However, an investor cannot directly trade in stock exchanges. 

But How do you Buy and Sell Stocks in a Stock Market?

To successfully carry the transaction of stocks trading, you are required with an intermediary who helps you in purchasing and selling the stocks in a much better way. This intermediary can be a person or a company that is authorized to do the transaction of stocks on your behalf. Such a company or person is known as a stock broker in India.

A stock broker in India can be anything a stockbroking firm or an independent firm; known for providing stockbroking services for the customers.

In general, a stock broker is the one who performs a service for the investor. The main job of a stockbroker is to buy and sell stocks for a client. Also, a stock broker helps their customers to get a detailed insight into a stock that helps investors to make informed decisions about the investment.

Before we step into the importance of stock broker, let’s figure out how to choose the best online stock broker:

Selecting the right online stock broker is an extremely crucial decision you will make as an investor. This is because a perfect stock broker not only helps investors to determine the stocks but also guides them to pick the best stocks which are capable enough to generate better returns for them.

If you are a newbie who wants to invest in stock market trading, it is suggested to pick the best online stock broker, as with the help of it, you can handle all the stock market operations at a fingertips. Although there are different types of broker available online, choosing the best one is still a challenging task.

Selecting the Best Online Stock Broker

1. Comprehend your Basics

Understanding needs while investing in the stock market is the foremost point. That’s why opt for a stock broker who clearly understands what you expect from stock trading.

Many online stock brokers charge high brokerage charges which may not satisfy new investors. Hence, it is suggested to go through the stockbroker who provides excellent stock trading services at affordable brokerage charges.

2. Stock Market Pricing

It is important to check the pricing of a stock broker before deciding to move further. Try to find out the AMC annual maintenance charges. These charges vary from broker to broker. Some of the stock brokers charge a very high amount while there are some stock brokers, who charge quite low brokerage charges.

3. Range of Trading Segments

Different investors have different priorities in trading financial products such as Equity, commodities, IPOs, FDs and more. Go for the stock broker who has different financial products.

4. Fund Transfer Process

Select a stock broker which comes with 3 in 1 Demat account as the stock broker provides seamless fund transfer services which allow investors to trade with ease. Conversely, if you open demat account with a non-bank stock broker, then you will need to transfer money every time you start trading.

5. The Expertise of Research Team

While selecting a stock broker, it would be ideal to check the research team provided by the stock broker first. This is because the research reports generated by the stock broker help investors in picking the best stocks that would give them high returns.

Importance of a Top Stock Broker in India

Margin Financing:

In share trading, margin trading refers to the process where individual investors buy more stocks than they can afford. Also known as intraday trading, margin trading allows all the transaction of stocks (buying and selling) in a single day.

Now Intraday’s stock brokers are well capitalized. Here, stock broker lends capital to the traders who want to leverage their positions. A margin amount is to be paid by traders after which they are allowed to take positions in the stock market. Generally, the margin amount is 50%.

Recommend the Best Deals

Mostly, a broker deals in all types of securities. The stock brokers suggests the best deals to its clients such as when to buy or sell a stock. Majorly suggest the stocks on the basis of advisory, and research reports suggested by them.

Handling Trade

A stock broker receives orders from multiple traders and places those orders on a stock exchange. Once the order is successfully placed, trades will get to know about it. However, this is the case with full-service stock broker of India, online brokers facilitate trades with trading platforms where traders can place their orders on their own.

All the orders are automatically visible in your Demat account once they are successfully placed and executed.

Paid on Commission

Full-service stock brokers charge commissions in the form of brokerage for the services they provide to traders. This charge is some percentage of the trader they provide to clients. Discount brokers charge a flat commission which is pre-decided on every executed order. 

Buying and Selling shares Online in India?

Now, many of you have acknowledged the fact that how share trading can play a valuable role in your life. Yes, you heard it right. Investing in online share trading gives you bundles of opportunities to invest in different types of stocks.

Once you gain appropriate knowledge about stock trading, you can easily perform transactions with such an ease and book a significant amount of profit. In case you need any help, you can easily connect with an online stock broker, during the initial days. Once you become a thorough expert in buying and selling shares then you can try to do it on your own.

Here are 5 steps through which you can buy shares online:

PAN Card

For the Demat account opening process, you must require the important document as proof i.e PAN Card. PAN stands for permanent account number; a primary requirement for entering any financial transaction across any country. It is a valid ID proof that is issued by the government of India.

Depository Participants

NSDL (National Securities Depository Limited) and CSDL (Central Security Depositories Limited) are the primary depository participants of India that helps you to store the shares you hold. They provide you with a unique account pertaining to the same.

Many people often get confused with the term Demat and Trading account. Demat Account shows the number of shares you hold. Trading account, on the other hand, allows you to buy and sell shares that you currently have.

Picking the right Stock Broker

If you are a beginner then it is suggested to consult a full-service trusted broker. This is because the full-service broker gives you guidance on the day to day aspects of share trading. These stock brokers are SEBI (Security and Exchange Board of India) certified and given license to act as a broker. In other words, a broker is an intermediary between an independent stock broking firm and share trader.

Ways to Perform Buying and Selling of Shares

This is how you perform in buying and selling shares. For instance, you have bought shares of Rs 890 with the assistance of a broker, the broker will ensure you regarding the purchase order or stop order. Also, they help you to execute the stop order if you want to stop the transactions during the day.

How Best Stock Broker in India regulated?

Stock brokers in India are regulated under the Securities and Exchange Board of India Act 1992, Securities Contract Regulations Act, 1956, and also the Securities and Exchange Board of India (Stockbrokers and sub-brokers Regulations), 1992.

In addition to this, stock brokers are also regulated under other regulations and bylaws that SEBI may issue from time to time.

Important Note:

Every stockbroker in India needs to be a member of stock exchanges and also requires to be registered with SEBI. Stockbrokers display their registration details on their websites and even on official documents. To get any inquiry about registration, one can also visit the SEBI website and find details of registered stockbrokers.

Types of Stockbrokers

Now you all know about a stock broker and how they are regulated, let’s take a quick tour of the types of stock brokers.

Based on the types of service provided, there are majorly two types of stockbrokers – full-service stockbrokers and a discount stockbroker.

Full-Service Stockbrokers:

Full-service stockbrokers offer full trading services along with a wide range of add-ons to their clients. They are traditional brokers who provide advisory services, research reports and relationship managers aside from assisting you in buying and selling shares. Furthermore, Stock Broker also provides a variety of services including IPO, mutual fund, insurance, loans etc.

Many investors preferred to take services from full-service brokers. The foremost reason is that stock brokers are established players as they have opened their branches all over the country. Therefore, it becomes easier for the clients to use these branches for services and advice.

Discount Stockbrokers:

Discount stockbrokers, on the other hand, do not provide any advisory services and research facilities. They have come into existence because of the easy accessibility and usage of the internet. These top stock broker in India, provide an online trading platform for their clients. And hence, discount brokers charge flat brokerage charges which is mostly a flat fee.

In the world of digitization, all brokerages have started to provide online stock trading services to their clients where users can log in to the stock trading account with a username and password for the execution of trades.

Online stock broking services are faster than traditional service as transactions can occur with the internet.

Also, online stockbroking services provide stockbrokers with a facility to connect with the clients through emails, chatbox and provide real-time updates.

After getting a lot of information regarding stockbrokers, it is also essential to take a quick glance at a sub-broker.

A sub-broker is appointed by brokers who act on the behalf of a trading member or stockbroker for helping investors in the dealing of financial securities through trading members. A sub-broker is a person or agent who is not a member of the stock exchange. Sub brokers don’t have direct permission to deal in securities. Firstly they need to register with SEBI to trade in financial securities.

Rights and Responsibilities of Stock Broker, Clients and Authorized Persons

All the parties involved in trading services whether it is clients authorized persons or stock brokers, all are governed by SEBI. This states that all the transactions, liabilities involved in share trading must maintain clarity and transparency.

Here is a list of rights and responsibilities of the top stock broker in India:

    • Firstly, the stockbrokers, authorized persons and clients all are bound by the rules and regulations set by SEBI.
    • For clients, it is suggested to invest only in financial instruments that are approved and listed by SEBI.
    • It is a major responsibility of the client to confirm the authority and capacity of a stock broker before investing through them.
    • Also, stock brokers have a responsibility to update themselves before presenting any information, executing transactions on their behalf.
    • Stock brokers must make their customers aware of the stock trading methods, liabilities, capacity, policies, rules under which stock brokers have to work.
    • For clients, it is requested to clear all the queries related to the account opening process and provide all the documents carefully read investment guidelines.
    • Stock brokers must maintain all the client-related documents but shall not disclose all the details with others.

Code of Conduct For Stock Brokers


A stockbroker shall maintain full integrity, fairness and promptitude in the conduct of all the business.

Exercise of Due Skill and Care:

A stock broker shall act with care, diligence and due skill in the conduct of all his business.


A stock broker shall not indulge in deceptive schemes, fraudulent transactions or spread rumors in order to distort market equilibrium or making any personal gains.


A stock broker shall not create a false market either single or in concert with others. Also, stock brokers shall not indulge in any act detrimental to investors interest that leads to interference with the fair or smooth functioning of the market.

A stock broker shall not involve himself in excessive speculative business in the market beyond reasonable business not commensurate with his financial soundness.

Compliance with Statutory Requirements

A stock broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the board and the stock exchange from time to time as may be applicable to him.

Becoming a Stockbroker

As there are no specific educational requirements for becoming a stock broker, there are certain courses that may help you leverage the benefits of a stock trading job.


The minimum qualification for becoming a stock broker is graduation with at least 2 years of experience in a stock broking firm. Many stock brokers also have a master’s degree called an MBA in finance which helps them to get knowledge of mathematics, statistics, qualitative analysis and more.


Stock brokers often gain experience in stock training by working in a stock broking firm as it will help them to get a deep understanding of the regulation of the stock market, financial markets and accounting practices.


Brokers should also pass the entrance exam that is available in this field:

BSE Certifications on Central Depository

BSE Certifications on Derivative Exchange

BSE Certifications on Currency Futures

BSE Certifications on Security Market


Indian capital market is considered as one of the most organized and regulated sectors. The foremost reason for the excellent organization is SEBI. Whether you are an investor or a stock broker, you should work in stock trading according to the guidelines governed by SEBI or else you may find it in a difficult spot.

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