How do brokers make money?

Brokers make money mainly through brokerage fees, commissions, margin interest, account-related charges, and partnerships with third-party service providers. Even discount brokers offering zero brokerage on delivery trades earn revenue through volume-based services and value-added offerings.

Brokerage fees on trades

This is the most common revenue stream for brokers. Every time you buy or sell a stock, the broker charges a brokerage fee — either a flat rate or a percentage of the transaction value. For example, if you trade worth ₹1,00,000 and the broker charges 0.3%, you pay ₹300 in brokerage.

Some brokers like Angel One offer zero brokerage on delivery and flat fees on intraday and F&O trades to attract volume-based traders.

Margin interest income

When traders use margin or leverage to take larger positions, brokers earn interest on the borrowed amount. This is similar to banks earning interest on loans. The interest rate depends on the broker’s margin policy and market conditions.

This is a big income source for brokers who offer margin trading, especially to active traders.

Account maintenance and transaction fees

Brokers charge annual maintenance fees (AMC) for demat accounts. They may also collect charges for services like call & trade, physical statements, SMS alerts, and off-market transfers. These small charges, when applied to lakhs of customers, add up to major revenue.

While many brokers offer free account opening, these charges help them recover service costs.

Revenue from premium tools and research

Some brokers offer advanced trading platforms, technical screeners, portfolio analytics, or premium research for a subscription fee. These services add value for serious traders and become a regular income stream for brokers.

Angel One also provides smart tools and advisory features to help users trade smarter and more confidently.

Third-party partnerships and distribution

Brokers also earn commissions by distributing mutual funds, insurance, bonds, IPOs, and loan products. These partnerships with financial institutions help brokers generate income through lead generation and product sales.

For example, if a user invests in an NFO or takes a personal loan through the broker, the broker earns a small cut of the transaction.

Whether you’re paying brokerage fees, using margin, or accessing research tools — brokers have multiple ways to make money while helping you invest efficiently. Choose a broker like Angel One that offers transparent pricing, zero hidden fees, and maximum value with every trade. That way, both you and your broker benefit from smart, sustainable investing.