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Review Article on the Stockbroker 5Paisa along with details of their History, Brokerage Charges, Products and Services Offered and Pros and Cons

The second-largest discount broker firm, 5Paisa Capital Limited has created a huge customer base just in a very short span of time. This Fintech startup has also won many awards and has evolved as a case study for any other stockbroking firm in this industry. The firm started first as being part of the IIFL Group – the largest financial services firm in India. Mr Nirmal Jain has founded this discount broking firm and later they converted it into a separate entity in 2017. Despite being a newcomer into this market, 5Paisa has already made its presence noticeable in the areas of online trading, mutual funds and insurance industry. It is also truly admirable for a new player to set a target of creating a client base of over 1 million in just 3 years. The way their active users are increasing, 5Paisa has a target of hitting 1 million customers by December 2020. 

The review article from the Trade Brains is exclusively made available to you that will serve as your complete manual and will enable you to study the second-biggest discount broking firm from the start to finish including its origin, the brokerage charges they imply, why you should consider trading through 5Paisa, what are its drawbacks, what range of other products and services they offer apart from the stockbroking service and many more.  

The Origin of 5Paisa Capital Limited

Mumbai based Fintech startup was originally formed in 2007 with India Infoline Financial Holdings Limited. Later, the company changed its name to IIFL Capital Limited and lastly in 2015 the name was changed to 5Paisa Capital Limited. The founder Mr Nirmal Jain has a great track record with a full-service broking firm IIFL Securities, and it enjoys a market reputation of one of the largest full-service stockbrokers as a part of the leading financial services group – The IIFL Group. In May 2017, IIFL effected a demerger plan to separate 5PCL as a separate legal entity that got listed on BSE and NSE in November 2017. Today, Mr Prakash Gagdani is chairing as a Chief Executive Officer of the company. 

5PCL’s 5paisa.com offers the next-generation trading platform and investment experience for the investors that are equipped with the innovated technologies and a hassle-free platform to trade and invest. If we talk about the achievements of this company, then there are four milestones that the company has reached in just 2 years’ time. They won ‘The Digital Startup of the Year 2017’ award from the World Digital Marketing Conference as the fastest developing digital financial company that offers 100% digital platform to its customers to trade and invest. Two more feathers added again in November 2018 were the awards namely ‘Emerging Brand Excellence in BFSI Sector’ and ‘Best Mobile Trading App’. They were also recognized as the ‘Best use of Mobile Technology in Financial Services’ in February 2019 which is an incredible moment for any startup as a rapid growth making firm that too with a large number of competitors in the industry. It is accredited as a Premium Depository by CDSL in 2019. 

With their technology-driven investment solutions, they offer everything, and even more than any other discount broking firm would ever provide to its customers at a very low cost. They have a presence across BSE, NSE and MCX for online trading in Equities and Currency. They also offer Insurance products and its related services, Robo advisory, IPO services, Trading, Demat and Intraday services along with research reports and online as well as offline advisory services for free to its customers. They provide margin exposure in Equity Intraday up to 35x which is impressive for a new player in this industry. They charge flat Rs. 20 as a brokerage charge irrespective of the size of the trade and such charge gets reduced further with other subscription plans. Their innovations into research products help investors prepare a low-cost diversified portfolio based on each customer’s specific requirements. They also promote educating investors and traders by providing video explanations, articles and other knowledge enhancing materials. 

List of Charges: Brokerage and Transaction Charges, Account Opening Charges 3and Other Related Charges

Brokerage Plans:

Optimum PlanPlatinum PlanTitanium Plan
FeeFree₹499/ month; ₹4,444/ year₹999/ month; ₹8,888/ year
Brokerage₹20/orderAll segments-₹10/order, Equity Options- ₹2/lotEquity Delivery-Free, Equity Options- ₹2/lot, Other segments- flat ₹10/order
Maintenance Charge₹45/ Traded MonthFreeFree
DP Transaction Charges₹25 or 0.025%FreeFree
Pay In charges₹10FreeFree
Call-N-Trade₹100/ callFreeFree
Direct MF Investment Charges₹20FreeFree
Research AdvisoryNot AvailableFreeFree
Free TradesNANAFree 100 trades per month maximum of ₹1000
Dedicated Customer SupportNAFreeAvailable

Account Opening Charges:

ServiceCharges
Trading Account Opening Charges (One Time)Rs. 650
Trading Annual Maintenance Charges (AMC)Free
Demat Account Opening Charges (One Time)Free
Demat Account Maintenance Charges (AMC)Rs. 540 every year (Rs. 45 per traded month)

Margin / Exposure:

SegmentMargin
Equity DeliveryUp to 4x (Category E 4x, A 3.5x, B 3x, C 2x, D 1.5x)
Equity IntradayUp to 20x
Equity FutureIntra-day: 3.5x | Carry forward: 1x (no margin)
Equity OptionsIntra-day: 1x | Carry forward: 1x
Currency FutureIntra-day: 1 time | Carry forward: 1x
Currency OptionsIntra-day: 1x | Carry forward: 1x

Key Features

  • It uses advanced technologies and provides tech-driven trading and investment experience with 100% online trading platform as a Fintech Startup. 
  • As a flat brokerage service provider, it comes up with free equity delivery transactions along with a flat charge for other transactions.   
  • They also offer cheaper brokerage charges than Rs. 20 if any active trader subscribes to a specific plan which is fixed based on the requirements of different traders and their frequency of trading. 
  • Since it is an online trading platform, there is no need to submit documents online. The account opening process can be done by providing necessary documents and information online just in 5 minutes!
  • They offer free mutual fund investment options which mean there is no brokerage or other charges implied if you invest in mutual fund through 5Paisa. 
  • Their Robo Advisory service is entirely dependent on Artificial Intelligence that offers stock tips and investment recommendations.
  • They offer two types of accounts – one 5Paisa Trading Account and the other Mutual Fund Account. The Mutual Fund Account type comes up with an Auto Investor tool that provides free advisory on various Mutual Funds. 

Overview of What 5Paisa Offers along with its Features

The products and services offered by 5Paisa included in the wide range along with Insurance and Mutual Fund investments. Below is a brief of what all is offered by the discount broking firm:

Products: They offer Equity, Derivatives, Mutual Funds, SIPs, Insurance and Currency under its variety of options to offer valuable products. Since it is a discount broking firm, they charge cheaper than the other brokers and is highly recommended for first-time investors.

Services: The technology-driven Fintech startup provides Demat and Trading account services, Intraday, IPO and Robo Advisory which is based on Artificial Intelligence.

Robo Advisory: The AI-based Robo Advisory service offered by 5Paisa provides stock tips, investment recommendations, weekly stock performance and other daily picks. 

5Paisa App: The app is an all-in-one solution for any type of trading or investment. From placing an order to its execution, tracking the orders, order and trade book, customized watchlist, investment in mutual funds, net position overview everything is combined in just one app.

Trade Station: It is a browser-based trading platform with the high-speed feature that allows investors to invest and trade in equity, derivative, mutual fund and transfer of funds.

Research Products: They offer various research products such as Smallcase, Swing Trader, Sensibull for Options, Smart Investor and Screeners. Smallcase produces low-cost diversified investment products based on personalized requirements.

Pros and Cons

Talking about the Pros and Cons of trading and investing with 5Paisa, it should be noted that the below are the general Pros and Cons and it may be different from person to person as the need and requirement of each investor will change accordingly.

Pros: 

  • It provides stockbroking services at a very cheap cost and that is the reason it is affordable for everyone.  
  • Various prepaid brokerage plans are designed specifically considering active traders and investors requirements to provide them with the services at cheaper than the flat brokerage rate.
  • The technology is used efficiently to provide online stockbroking services hassle-free and that is why it gives the simplest form of trading online. 
  • Direct mutual fund investment option is provided for free along with advisory related to the top-performing mutual funds.
  • This firm is promoted by the IIFL Group which is the leading financial services provider.
  • The research and advisory services with fundamental and analytical studies are provided free of cost.
  • The School product offers online education regarding markets and it is provided for free.
  • Apart from other products and services they provide insurance and its related services.
  • It is a fast-growing discount broking firm with customers increasing in large numbers every year and it has won many awards in a very short duration since its operations.

Cons:

  • They only have a presence in Mumbai. As they are providing an online trading platform, they lack branches and offices in other cities. 
  • Their Robo Advisory service lacks human research and recommendation and hence it provides on AI-based responses which are not always concrete. 
  • They do not offer Demat, Trading and Banking – 3-in-1 account.
  • They also do not offer commodity trading and NRI Trading Services.
  • The Optimum plan is designed in a way that few services are not