A stock broker is a firm that connects investors to the stock exchange. In India, you cannot buy or sell listed shares directly on the NSE or BSE; you place orders through a broker registered with SEBI, the securities market regulator.
What a broker is
Stock exchanges allow only their registered members to place orders in the market. Brokers are those members. They provide you with a trading account and, usually, a demat account, an app or website to place orders, and services such as contract notes, statements and customer support. In return, they charge fees called brokerage.
Brokers in India broadly fall into two groups. Full-service brokers offer research reports, advice, relationship managers and a wide range of products, and usually charge higher brokerage. Discount brokers focus on low-cost online trading with fewer extra services. Both types must follow the same SEBI rules.
How it works in India
To start, you complete KYC with your PAN, Aadhaar-linked details and bank account. The broker opens a trading account, often linked to a demat account. When you place an order, the broker sends it to the exchange, the exchange matches it, and settlement happens through the clearing corporation. You receive a contract note for every trade, showing the price, quantity and all charges.
Apart from brokerage, a trade includes statutory charges such as Securities Transaction Tax (STT), exchange transaction charges, SEBI fees, stamp duty and GST. These are the same whichever broker you use, while brokerage itself differs.
A simple example
You buy shares worth ₹10,000 through a discount broker that charges a flat fee per order. Your contract note shows the brokerage, STT, exchange charges, stamp duty and GST. Comparing the total cost of the same trade across two brokers helps you choose the one that suits how often and how much you trade.
Why it matters for investors
Your broker affects your costs, your experience (app quality, order types, support) and, importantly, the safety of your money and shares. A reliable, SEBI-registered broker that follows client-fund rules is essential.
What investors usually compare
The basics come first: SEBI registration and a clean regulatory record. Investors then usually compare total costs for the way they trade, including account opening, annual maintenance, brokerage and any charges for selling shares from the demat account; the platform, such as whether the app stays stable during busy market hours and is clear about orders and charges; support, meaning whether a person can be reached when something goes wrong; and the features they actually use, such as research, mutual fund investing or margin.
Example on PositoAI: why order size matters, India
On 20 Oct 2026, share prices of the 2,140 ranked Indian companies on PositoAI ranged from under ₹1 to about ₹1.22 lakh for a single share of MRF, the highest-priced. 675 traded below ₹100, 1,121 between ₹100 and ₹1,000, and 23 above ₹10,000.
Because many brokers charge a flat fee per order, the same fee weighs very differently on different orders: a fee of ₹20 is 4% of a ₹500 order but less than 0.02% of one MRF share. Statutory charges such as STT are a percentage of the trade, so they scale with the order instead. (As on 20 Oct 2026; prices change daily.)
Common misconceptions
"The cheapest broker is always best." Low cost matters, but reliability, service and platform stability matter too.
"My broker's tips are guaranteed." Research and recommendations are opinions, not guarantees.
"Zero brokerage means zero cost." Statutory charges such as STT and stamp duty still apply.
Frequently asked questions
How do I check if a broker is genuine?
Verify its registration on SEBI's website and the exchanges' member lists.
Can I change my broker?
Yes. You can transfer your shares to a demat account with another broker.
What is a contract note?
The official record of each trade, showing price, quantity and charges, issued by your broker.
Is my money safe with a broker?
SEBI has strict rules on how brokers handle client funds and securities, but always use a registered, reputable broker and check your statements regularly.
How to use this on PositoAI
PositoAI is not a broker and does not place trades. It is a free research platform you can use alongside any broker. Read our guide to stock brokers in India, and research companies on PositoAI before you place an order with your broker. PosiStep 5 of PosiCourse, PositoAI's free stock market course, explains how a share trade works, from orders to settlement and charges.
Summary
A stock broker is the SEBI-registered firm that sends your orders to the exchange. Full-service brokers offer research and advice at higher cost; discount brokers offer low-cost online trading. Every trade carries brokerage plus statutory charges. Investors usually check a broker's registration and record, compare total costs, and review contract notes and statements.