Trade Smart makes discount brokerage simpler for you by bringing it online
Discount brokerage is generally restricted, and taken up only by experienced and mature traders. And now, the process of discount brokerage, one of the most traditional financial transactions, is reaching the online space. One such platform is Trade Smart Online, an online discount brokerage platform, where the client pays purely for transacting on the trade.
According to estimates, India has over 100 discount brokering companies. And now, with discount brokerage hitting the digital space, brokers now have access to a larger number of clients. According to Vikas Singhania, Trade Smart Online is about people and the maximum benefit a customer can get from the platform.
He says that most brokerages charge a minimum amount for stocks below a particular price. Their aim in doing so, according to Vikas, is to protect their brokerage in absolute terms. He adds that low-priced stock would give them minuscule brokerage if calculated in percentage terms.
He says that this particular method of calculating brokerage has a big impact on the profitability of the client. To add to this, he says that discount brokers as a practice do not offer any recommendations. In case, a client wants to use recommendations he has to pay for the same. “They will conveniently brush recommendations that did not perform under the carpet. The near-rock bottom brokerage cost makes a lot of difference for a client, especially if he is trading with large volumes,” adds Vikas.
Trade Smart Online provides a platform for transaction, and the services that are essential to complete a transaction.
Building Trade Smart Online
Fascinated with technology from an early age, after finishing his MS in Industrial Engineering and before pursuing his MBA from Purdue University, Vikas had joined his father’s business, VNS Finance. It was during his stint here that Vikas gained a deep understanding of the stock broking business.
He adds that the stock broking business had already become extremely competitive, with retail clients struggling to break even. “I knew that a concept like discount broking would come to their rescue with reduced trade costs,” says Vikas. In 2008, after doing market research, the father-son duo decided to launch this new offering. However, the global markets had begun to crumble at that point in time, post the Lehman crisis.
While waiting for the markets to stabilize before launching out a full-fledged roll-out, the duo started to work on proprietary training, updated their technology and improved their internal systems. “Over the next few years, not only did markets stabilise, but also the Indian economy caught up with technological upgrades too. Smartphone penetration in the country accelerated, aided by much higher bandwidth speeds. We realised that the market was now ready for our offering. That’s how Trade Smart Online was born, in January 2013,” says Vikas. The initial seed money was raised by VNS Finance.
Trade Smart Online started operations two years back, and the company has grown to three times its size last year, in terms of number of clients and revenues. Currently, Trade Smart Online has over 16000 clients that help generate daily volumes of close to Rs 25 billion. According to Vikas, this has been possible due to cost effective and convenient products that suit the clients’ needs and requirements, and also due to seamlessly integrating trading experience with technology.
“We are location-agnostic. While our registered office is in Mumbai, we have clients from several parts of the country. Being a discount broking online platform, we do away with the need of having a physical presence in cities/states. In fact, this (low establishment costs, low manpower costs) is precisely what helps us in keeping our costs low, which we effectively pass it on to clients by way of lower brokerage charges,” says Vikas.
For a traditional practice like brokerage, one of the biggest challenges that Vikas and his team had to face was building trust and faith. Being a nascent industry, it took time for Trade Smart Online to acquire the right perception among investors.
Differentiators and revenue
Vikas says that technology has been one of the greatest differentiators for Trade Smart Online. He adds that it enables clients to be aware of what and how much to pay. “Our client base is varied, and so are the needs of our customers, leading us to design systems and processes that provide sound guidance on planning and execution”, adds Vikas.
The revenues of Trade Smart Online are a function of the volumes generated by the clients. Therefore, Vikas says that the higher the volumes, the higher the client mining and the more buoyant the capital market. This according to Vikas, not only encourages increased trades, but also improves the value of the trade.
The team has three pricing plans; apart from charging the lowest brokerage at 0.007 per cent for intra-day traders, they also have two other plans to offer; namely, the unlimited monthly plan under which a client pays a fixed sum monthly irrespective of the value he ends up trading through the month, and also the option of trading at Rs 15 per order irrespective of the size of the trade across segments. Clients can opt to choose the plan that best suits their trading requirement.
A growing space
Today the number of startups operating in the online discount space are growing. Some of the similar organisations in the space include RKSV, Tradejini and Zerodha. These in fact are growing at breakneck pace. According to reports, RKSV plans to increase the size of its user base to over 1,00,000 customers in the next four months.
“Internet penetration and growth of smart-phone usage is changing the way individuals trade on the stock markets. Tech-savvy individuals between 20 and 35 years are changing the ways of trading on the stock markets, and this is stoking the growth rates witnessed by the industry. This means that there is the probability of higher growth rates in the near future,” concludes Vikas.