R-Money stokes price war with free trading a/c

Anil Ambani group's Reliance Money today sparked a price war in the highly competitive brokerage space by offering a free trading account to its demat account holders, with the aim to tap up to 30 crore potential clients.

The brokerage and financial products distribution arm of Reliance Capital said that it was offering a free trading account for a year, with which one could trade in shares worth Rs 5 lakh. Earlier, it was charging a flat fee of Rs 500 for trading up to Rs five lakh in a year.

Reliance Money was the first company in the country to offer a flat fee structure for trading in stocks, commodities and other instruments, as against the industry practice of charging a certain percentage of the transaction as brokerage fees.

The industrywise brokerage fees average around 0.5 per cent for delivery-based equity trades, which would amount to Rs 2,500 for a transaction worth Rs five lakh. Leading brokerages such as ICICI Direct and HDFC Securities charge 0.25-0.75 per cent on delivery-based equity trades.

The offer would be available to those opening a demat account with Reliance Money in the next few weeks, the company said.

Those seeking to trade beyond Rs 5 lakh would have to pay Rs 500 for trading up to Rs 1 crore (for 2 months) or Rs 2,500 for Rs 6 crore (for a year), it added.

"We expect to add more than two lakh demat accounts with this offer. Our entire effort is focused on getting the not-so-savvy semi-urban and rural investor to participate in the stock market, in addition to the savvy investors who are already trading on one or the other platform," Reliance Money CEO Sudip Bandyopadhyay said.

Reliance Money has an account opening fee of Rs 750 and a demat account annual fee of Rs 50.