Equity delivery will continue to be free at Zerodha, says Nithin Kamath

Equity delivery will continue to be free at Zerodha, says Nithin Kamath

Low-cost brokerage Zerodha will continue to be free for equity delivery, said CEO Nithin Kamath on October 1.

As market regulator Sebi's true-to-label circular came into effect on October 1, Kamath spoke, in an X post, about the revised charges for F&O trading.

"Equity delivery will continue to be free at @zerodhaonline. As of now, we are not making any changes to our brokerage.

From today, Oct 1, 2024,

For options: STT increases to 0.1% from 0.0625%, and transaction charge decreases to 0.035% from 0.0495%.

This results in the cost of trades seeing a net increase of 0.02303% or Rs 2303 per crore of premium on the selling side on NSE and of 0.0205% or Rs 2050 per crore on BSE.

For futures: STT increases to 0.02% from 0.0125%, and transaction charge decreases to 0.00173% from 0.00183%.

This results in a net increase of 0.00735% or Rs 735 per crore of futures turnover on the selling side.

You can check out our brokerage calculator to see the new charges.

Since STT is charged on the entire contract value for futures, whereas in options, it is charged only on the premium, the impact will be much larger for futures traders," said Kamath in a post on X platform (formerly Twitter).

In July, Kamath had said that Zerodha earns 10% of its revenue from rebates that would cease to exist with Sebi's true-to-label circular.

Stock exchanges charge a transaction fee based on the overall turnover contributed by a broker in a month. The more turnover, the lesser the transaction fee. You can see the latest slab-wise transaction charge charged by NSE here. The difference between what the brokers charge the customer and what the exchange charges the broker at the end of the month is a rebate.

"We earn about 10% of our revenue from these rebates. This could range between 10% and 50% of the revenue for other brokers. For us, this has increased from 3% to 10% in the last four years because of the increase in options turnover. Today, 90% of our revenue from these rebates comes from options trading alone. With the new circular brokers will no longer earn these rebates," Kamath said.

"All brokers may be forced to tweak their pricing models to adjust to the new reality in a few months. The hope with this circular is that the exchanges will pass the benefit to customers by charging the lowest slab. So, an increase in F&O brokerage shouldn’t be of any impact," added Kamath.

Zerodha’s profit grew 62 percent from the previous year to Rs 4,700 crore in in the financial year 2023-24, the country’s leading stock broker said on September 25.

The firm’s revenue grew 21 percent to Rs 8,320 crore.

Zerodha is the country's largest discount broker in revenue and its huge profits mean that its operating margin is at 57 percent. And if the unrealised gains are added, the operating margins could hit 69 percent.