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Want to trade in the stock market? Then an online broker is what you need.
Since an online broker allows you to trade over the Internet, you can buy or sell shares from anywhere in the world. You can even check your portfolio when you want to.
Which brings us to the two common questions facing individuals interested in online trading:
1. How easy is it to open an online trading account?
2. How should one compare the various trading accounts?
Today, we will tell you how to open an online trading account.
Tomorrow, we will explain how you can compare different online trading accounts.
To answer the first question, we decided to actually follow the procedure to open an account. This meant getting on to a web site and tracking down a contact number.
I selected a few online broking firms and called them. I told them I was interested in opening an online trading account and requested them to send someone over for a demo.
All the following calls were made on Tuesday, October 11, 2005, after trading hours (which was at 4.15 pm that day; otherwise it is 3.30 pm). I left my cell number with all of them. The next day was Dassera, a holiday.
Here's how they responded.
Time of call: 4.40 pm
Number called: 28307777 (Mumbai)
"Good evening..."
The ICICI [Get Quote] customer service executive who took my call turned out to be both helpful and aggressive. She told me I would need three accounts -- a savings account, a trading account and a demat account. Since shares are now traded electronically, they are maintained in a demat account.
She also told me how much it would cost me and the documentation I would need to provide the bank.
When I requested that someone be sent for the demo, she promptly took my details -- name, number, address, date of birth -- and gave me a reference number.
While we were waiting for the system to generate the reference number, she told me about the bank's other banking products.
How responsive?
They got back to me only on Saturday at 4.42 pm.
The question posed to me was: "When can we send someone to pick up the documents?"
I told the person on the other side I needed a detailed demo before I could decide if I wanted to open an account.
"Do you have an account?" was the next question. She obviously did not understand what I was saying. I had to explain to her that I did not have an account; I wanted to open one and could someone please give me a demo?
"Oh, so you only want a demo?" she said, her disappointment apparent.
When I told her I needed some explanation about an online trading account, she promptly said: "I'll tell you."
I figured she did not want to waste company resources and time on someone who was unsure. Since it was Saturday evening, I asked her if she would call me on Monday. She agreed.
Fifteen minutes later, I get a call from another ICICI representative asking me when they could come over. "I just spoke to someone else and they said they will talk to me on Monday."
"Oh, okay," this person replied.
It is Tuesday morning as I write this and no one has called.
Time of call: 4.50 pm
Number called: 1600111130 (toll free)
"Give me your name and number," said the lady on the other side.
When I did, I was asked where I was calling from.
Bombay, I said.
"Someone will call you."
Very to the point, I must say. No information was volunteered and no conversation was entertained.
How responsive?
It is a week and till date -- October 18 -- there has been no response.
Time of call: 4.55 pm
Number called: 1600227500 (toll free)
A young person (at least he sounded young) asked me if I had ever traded before. I lied and said no. He assumed I did not know much about trading and told me why, besides a trading account, I would also need to have a demat account. He then took my name and number and promised that someone would get in touch with me.
How responsive?
Very. At 5.36 pm that very evening (40 minutes after my call), I get a call from a Sharekhan representative. He wanted to know when he could drop by. We agreed on Thursday.
He told me what documents I would need to open an account; he also told me what amount I would have to give by cheque to open the account. I was slightly alarmed and told him I did not open an account unless I was totally satisfied with the demo and checked out what other options were available to me.
He was there on Thursday, on the dot.
Time of call: 5 pm
Number called: 56775922-26 (Mumbai)
5 paisa is India Infoline's [Get Quote] online broking site.
Just like India Bulls, no information was volunteered and no conversation entertained. "Give me your name and contact number and I will send it to the marketing department," was what I was told.
How responsive?
On Friday, October 14, I got a call at 6 pm and we agreed to a demo on Monday.
Yesterday, we did the demo. This morning, they called to ask if I wanted an account.
Time of call: 5.07pm
Number called: 30305757 (Mumbai)
"Welcome to Kotak Street. Dial 1 for call and trade, 2 for customer service, 3 for mutual funds."
I pressed 2. No reply.
I called thrice but did not get a reply. No one picked up the phone.
The fourth time I dialled 3 for funds, hoping someone would pick up. No such luck!
Time of call: 5.11pm
Number called: 56575200 (Mumbai)
The operator came online and put me on to someone who then put me on to their marketing manager who introduced himself as Ajit.
Ajit, I have to admit, was very informative. He questioned me about the volumes I trade in (he wantd to know how frequently I buy and sell shares in a month). I told him I was doing it for the first time (I lied again). So he explained the different types of trading accounts and suggested the one he thought would suit me best.
He told me what documents I would need and the cost.
And, yes, he was the only one who said, "When can I call you to fix up a meeting? Can I call on Thursday morning to fix a time?"
Remember, the next day was Dassera and so a holiday. So we agreed that he would call on Thursday.
How responsive?
Very responsive. Ajit kept to his word and called me at 10.47 on Thursday morning.
Not only was his demo good, he was full of useful information as well.
Time of call: 5.20 pm
Number called: 28346600 (Mumbai) / 1600-22-9700 � toll free
My phone refused to connect to the toll free number while no one picked the other phone.
Why you need a broker
Now, in case you think this is all a waste of your time and you don't need a broker, hang on. A reader did ask us why he could not directly buy shares from the stock exchange instead of using a broker.
The stock market will have either one or a number of stock exchanges. In India, the most famous are the Bombay Stock Exchange and the National Stock Exchange.
Then there are regional exchanges like the Ahmedabad Stock Exchange, Calcutta Stock Exchange and the Cochin Stock Exchange.
People like you and me just cannot go to a stock exchange and buy and sell shares. If we want to buy shares, we have to get in touch with someone who is a member of the stock exchange. Which means we need to talk to a stockbroker (brokers are members of the stock exchange).
Stockbrokers buy and sell shares for themselves to make a profit. They also buy and sell shares on behalf of people like you and me and take a commission for doing so.
Every stockbroker has to be registered with the Securities and Exchange Board of India, the stock market regulator. SEBI's main function is to make sure those who invest in the stock market follow the rules and no scams take place. It is supposed to act as a watchdog on behalf of the investors.
Brokers have computer terminals in their offices, from which they trade. For instance, a broker on the BSE will also have BSE terminals in other cities. That means, you don't have to be physically present in Mumbai to trade on the BSE. Even if you stay outside Mumbai, you can contact a BSE broker and buy or sell stocks on the BSE.
- Proof of residence
- Proof of identity
- PAN
- Two photographs
Any one or two of the following documents should satisfy the proof of residence and identity:
~Driving license
~Voter's ID
~Passport
~Photo credit card
~Photo ration card
Let's rate them
Sharekhan and Motilal Oswal turned out to be the most prompt when it came to responding, followed by India Infoline.
However, the marketing executive from Motilal Oswal was the most effective. He was the only one who asked when he could call at the very first instance and even suggested the type of account to opt for.
He did not pressurise me to open an account at our very first meeting. Yesterday, he called to find out if I would like to open an account and promptly answered every single query.
India Infoline also called this morning to find out if I was interested in opening an account.
As on Tuesday morning, a week after making the calls, I got no response from India Bulls.
The lady from ICICI Direct never called back to answer my queries.
I never did get down to speaking to HDFC [Get Quote] Securities or Kotak Street, so I can't talk about their service.
Ditto with IL&FS InvestSmart online or Geojit Securities, whom I did not contact.
What was your experience in interacting with online brokers? Would you like to share it with other readers? We would love to hear from you!
Part II: How expensive is an online broker?
Illustration: Uttam Ghosh
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