What is the Role and Importance of Brokers in the Stock Market?

If you wish to participate in stock market trading, you have to do it through the stock exchanges. Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are the two most prominent stock exchanges in India. But, you cannot buy and sell stocks directly from the exchange. You need an intermediary to carry out the trade on your behalf, and this intermediary is known as a ‘stock broker’.

Let us learn more about stock brokers and their role and importance in the stock market.

Who are stock brokers?

Stock brokers are licensed and regulated financial firms that facilitate buying and selling transactions in various financial instruments such as stocks, derivatives and bonds.

In simple words, stock brokers are an intermediary between you and the stock market. They facilitate in buying and selling of stocks and securities in the stock market.

They are one of the most important stock market participants and play a vital role in online trading. Since you cannot interact directly with the stock exchange, they open demat and trading accounts in the depository on your behalf. In lieu of the services provided, they charge you a brokerage.

Stock brokers in India are monitored and controlled by the Securities and Exchange Board of India (SEBI).

Role and Importance of Stock Brokers

Apart from buying and selling stocks for clients, the role of stock brokers has evolved in a big way over the last decade. 

They help investors wade through the whole investment process, provide research-based advice on stocks to facilitate decision making, offer assistance to invest in alternative investment assets, IPOs and mutual fund schemes.

In the modern era of FinTech, stock brokers are striving to make stock market investments simple and easy by introducing new-age technologies. Like for example, today most stock brokers offer a mobile application that enables you to buy or sell shares in a single click within seconds, keep a track of your investments, create watch lists, interact with the community and do so much more.

In fact, few brokers also extend financing facilities for investors to take leverage positions. We can say that today stock brokers have transformed themselves to become a one-stop investment solution provider.

Also read - Difference Between Discount Broker And Full-Service Broker In India

Types of Stock Brokers

Based on the services provided, there are two main types of brokers for stock market.

· Full-Service Stock Brokers

Full-service stock brokers also known as traditional stock brokers offer a wide range of services and products to their clients including advisory services, research reports, stock recommendations, financial and retirement planning, investing and tax advice, regular portfolio updates, etc. apart from assisting in buying and selling shares. These brokers have a physical presence.

· Discount Stock Brokers 

Discount stock brokers mainly focus on buying and selling services only and they do not provide any advisory services or research facilities. They provide an online trading platform for their clients and have very less to no physical presence.

Services Offered by Stock Brokers

Stock brokers offer a gamut of services such as:

· Buying and Selling of Securities

One of the primary functions of a stock broker is to buy and sell securities on behalf of the clients based on the order placed by them through the broker’s terminal.

· Advisory Services

Stock brokers are well-versed with the working of the stock market and possess expertise related to the performance of stocks, market trends and so on. Furthermore, they have access to valuable databases and research findings. This helps them offer outstanding investment advice to their clients.

. Limited Banking Services

Stock brokers also provide limited banking services such as interest-bearing accounts, electronic deposits and withdrawals, etc.

· Other Investments

Apart from securities, stock brokers also offer different investment products such as mutual funds, exchange-traded funds, bonds, commodity trading, futures, options, etc.

In Conclusion

Just like any other stock market participant, brokers for stock market are an integral part of the stock market investment ecosystem. They not only facilitate buying and selling of stocks but also offer valuable investment advice to their clients. Therefore, it is crucial to select the right stock broker for your trading and investment journey.

Indira Securities is a renowned stock broker in India that offers extraordinary stock trading services to its clients. Open a demat account with Indira Securities and opt for a smarter way to trade in the stock market. 

Indira Securities Brokerage Calculator - Calculate and Compare Brokerage Charges Online, GST, STT Charges, SEBI Charges for equity delivery and intraday.