Stock Brokers: Meaning, Function and How To Become One

In India, a stock broker is an intermediary registered with the Securities and Exchange Board of India (SEBI) and admitted as a trading member of a recognised stock exchange. Brokers route your buy-sell orders to the exchange, settle trades through a clearing corporation and maintain mandatory records such as your client ledger and contract notes. This guide answers what is a stock broker in India, outlining their core functions, major types, and mandatory qualifications.

• Table of contents

• Functions of a stock broker
• Types of stock brokers
• Qualifications and regulations
• Stock brokers vs investment advisors
• Choosing a suitable broker

Functions of a stock broker

These combined activities show the role of stock broker executing trades with the aim of securing client funds and maintaining market integrity.

Types of stock brokers

• Full-service brokers – Provide branch networks, relationship managers and bundled research
• Discount/online brokers – Provide DIY platforms with limited advisory
• Bank-based brokers – Subsidiaries of large banks
• Hybrid models – Emerging fintechs

Understanding these categories can help match your needs to the stock broker functions you value most.

Read Also: Systematic Risk: Meaning, Types, Formula, and Example

Qualifications and Regulations

Let us look at some of the mandated stock broker qualifications and regulations:

These layers ensure only stock brokers with adequate qualifications and capital handle public money.

Stock brokers vs investment advisors

Broker vs investment advisor comes down to execution versus advice a broker places orders, an advisor guides strategy. Both may coexist if duly segregated.

Choosing a suitable broker

When you google “best stock broker in India”, keep in mind it's a personal choice. Evaluate the following factors:

• Cost clarity – Contrast delivery, intraday, clearing and platform charges. Flat-fee brokers may limit expenses even on big trades.
• Platform stability – View reported uptime and if major outages are promptly made good.
• Customer care and grievance resolution – Observe SEBI SCORES complaint information and response times.
• Research or tools required – Choose whether you desire extensive reports or superior algo APIs.
• Margin policies and risk controls – Conservative leverage may potentially guard against forced liquidations.
• Regulatory track record – Ensure no major penalties or investor-protection fund triggers.

Running this checklist will help you find a broker that can be suitable to your trading style.

Read Also: Risk Tolerance: What It Is & Why It Matters for Investors

Conclusion

A stock broker is much more than a mere order-router; the intermediary provides protection of settlement, manages risk and ensures you are compliant with SEBI norms. The knowledge about the various types of stock brokers, the compulsory qualifications and how they contrast with registered investment advisors can equip you to make informed decisions and maintain trading costs down.

FAQs:

What is the role of a stock broker?

To carry out client orders on recognised exchanges, settle transactions, and abide by regulatory requirements while offering voluntary research and tools.

How do stock brokers make money?

By brokerage charges (percentage or flat rate), platform fees, margin financing interest and related services like DP fees.

Are stock brokers regulated in India?

Yes. SEBI registers and monitors them under the Stock Brokers Regulations 1992, fixes net-worth requirements and carries out periodic audits.

What’s the difference between a stock broker and a trader?

The broker is an exchange member who brings trades together; the trader is an investor trading securities through that broker's platform.