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DIY trading, zero charge

Coming up is a stock trading app that charges zero brokerage on cash trades

Ravi and Raghu Kumar and Shrinivas Vishwanath, founders of RKSV, a firm that ventured into discount broking in 2012, are readying to launch Upstox, a trading app that will charge zero brokerage on cash trades and a flat rate of R20 per order on futures, options, currencies and commodities.

Srinivas Vishwanath, Ravi and Raghu Kumar
Srinivas Vishwanath, Ravi and Raghu Kumar

An enterprise launched by the brothers in the US in 2006 — Ravi, who studied actuarial science at the University of California, Irvine (UCI), was the programmer while Raghu developed trading algorithms — was a huge success. Comparing the scenario here to that in the US, Raghu, says, “Brokerage charges here encourage day-trading and discourage investors. There, everything is on a paper trade basis, regardless of the size of your trade — whether it’s sold on the same day or you are trading on futures and options, you pay a flat fee.”

Upstox comes in two variations. Basic is meant for cash trades only. Here, they charge zero brokerage which, they hope, will serve as a hook. Pro is where they monetise. This is where you can do intra-day trading, trades on futures, options, currencies and commodities for a flat-rate of Rs 20 per order.

Having to log in to the app with client codes however, means that while a user can be active on both versions,
the two cannot be used simultaneously.

A web version of the impressively light 8 MB app will be released in September, so you can place a trade on your phone, log off, open up a browser at home and pick up exactly where you left off.

Immediately compatible with Android, with an iOS version slated for release right after, it will switch automatically from 3G to Wi-Fi, EDGE etc. to ensure the experience is seamless, he adds.

CFP and independent wealth manager, Kavitha Menon has a question. “The exchanges levy some fees, plus there’s stamp duty, education cess, securities transaction tax etc. Do they plan to pay those for their customers? Besides, futures’ trades work on margins so clients will definitely have to park some cash with them.

Admitting that customers will have to bear the basic costs, Raghu adds, “Your exposure in Pro would depend on the amount you have with us. As soon as the MTM (mark to market) limit is hit, if the amount falls to less than 50 per cent, the client will get a call. If s/he doesn’t put in more funds, we’ll square off positions automatically.”

“Uptime (the reliability of a programme’s operating system) is vital. A minute could make all the difference, so we’ll have to wait and see how the product compares to others in the market,” says former Mumbai-based ex-banker Shalini Mehta.

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