Groww’s active investor base doubles in one year, Angel One gets closer to Zerodha

Discount brokers steal the show

Bengaluru-based discount broker Groww has doubled its active investor base over the past year, touching almost 11 million users in June, according to the National Stock Exchange (NSE) data. The company had around 5.65 million users during the same period of previous year.

Even as discount brokers brace for revenue impact due to the potential restrictions on futures and options (F & O) trading, the number of new demat accounts continue to grow rapidly.

In June, the number of demat accounts reached 160 million with a net addition of 4.2 million accounts. According to NSE data, the number of active investors is a little above 40 million.

Most of the top discount brokers also added sizeable new active investors,  with Groww alone adding over 550,000 users during the month. Mumbai-based Angel One added 220,000 active investors, while Zerodha added 150,000 users.

Angel One has been adding more users every month than Zerodha over the last year and is likely to surpass the latter soon.

Top Stock Brokers

Interestingly, most traditional full-service brokers – mostly backed by banks – usually see minimal growth since the rise of discount brokers over the last decade. However, SBICAP Securities, backed by the State Bank of India, has seen its active investors touch 920,000 in June from 560,000 during the same month of last year, a growth of 64 percent.

Likely F & O restrictions

Meanwhile, the top discount brokers are bracing for almost 30-40 percent knock on their topline following regulatory actions over the last fortnight.

While the number of F&O traders is between 10-20 percent of the overall active client base, they generate between 60-80 percent of the revenue for most of the top ten discount brokers.

First was the Sebi’s directive to charge customers a true-to-label fee, which meant that the larger brokers will not be able to receive rebates or passbacks from exchanges for a higher volume of trading facilitated through the broking platforms. This could hit discount brokers revenue by around 20 percent.

Another setback is that Sebi is planning to make some changes to reduce the F & O trading on Indian exchanges such as only one weekly options contract per exchange and a minimum lot size of Rs 20-30 lakh. This could also impact their topline by another 20 percent.