Discount broker Zerodha has blocked new purchases in illiquid penny stocks and options contracts.Zerodha founder and Chief Executive Officer Nithin Kamath said such trades could be used by phishers and fraud advisers.
We have blocked new purchases in all illiquid penny stocks and illiquid option contracts that we believe can be used for executing trades to intentionally create losses, both by phishers and fraud advisers. Hoping other brokers do the same to stop this sudden increase in frauds. https://t.co/VDnLEOTOfS
— Nithin Kamath (@Nithin0dha) April 26, 2020
Zerodha, on April 17, cautioned clients about phishing scams and issued guidelines for clients using its trading platform Kite.
As per the company, fraudsters use fake websites and contact clients via SMS, email and social media.
Zerodha suggested users enable two-factor TOTP authentication instead of a PIN.
"We will start sending alerts and mandate an email or SMS OTP to be entered any time you log into Kite from a new device or location," Zerodha added on the statement.
The discount broker, which began operations in 2010, has over two million clients. It applied for a mutual fund license in February.