Discount Brokers Look Like The New Kings Of The Share Market

There was a time when brokers were the supreme kings of the share market. There were full-fledged brokers who controlled all the access to the share market and charged heavy commissions from the investors on the pretext of providing them the access in return. They also received trading fee rebates from the exchange. So, brokers were really making good money and the share market business was profitable to quite a number of brokers. That was a time when brokerage commissions were almost fixed and therefore, trading firms competed on the basis of service and relationships, rather than price. However, a little later came a wave of discount and online brokers. Electronic trading dramatically increased trading volumes and liquidity and slashed the cost of intermediation and broadened access to markets. This was certainly in the favour of investors who were fed up of paying heavy brokerages to brokers.

Today, the competition amongst brokers is fierce. People who are price sensitive and look for brokers with low service charges and are ready to take the major hassles of trading on their own, they prefer discount brokers. This is so because discount brokers do not provide any ancillary trading assistance. They are famous as no frills and fancy brokers who are just focussed on prime trading tools. And people who do not have time to manage their trading accounts and look for extra help in terms of research etc., they still like to go with a premium, full-service brokers. People usually wonder as to how discount brokers have become so successful. The reason behind their success is their low cost of operations that gets reflected in their low service charges thereby enlarging their customer base. Not everyone wants to pay or can pay good sum of money as service charges to brokers. So, for all such people, discount brokers are best.