Kotak Securities waives API fees, launches AI Tool 'Neome'

Kotak Securities waives API fees, launches AI Tool 'Neomi'

Kotak Securities, the third largest full-service broker, has waived off Application Programming Interface (API) charges for its customers even as the market regulator formalises algorithmic trading.

Most prolific algo traders use APIs to connect to brokerage firms and pay a fee to enable such transactions. API is a technology solution that helps two different institutions communicate.

“While we had our APIs for some time, these are a new stack of APIs, which is amongst the best. What we have also done is we have priced it at zero. When customers use a fintech platform for their algorithm and execute trades through a brokerage firm, this substantially increases the cost,” Ashish Nanda, president and chief digital business officer, told Moneycontrol.

Kotak also does not charge any brokerage fees for such transactions.

When customers trade on a broker's mobile or website, they get an interface to trade. When using brokerage APIs to execute a trade, the customers have to pay a subscription fee for the algorithm as well as the execution fee to the brokerage house.

The increased interest in algorithmic trading comes after the markets regulator, Securities and Exchange Board of India (SEBI), in a circular issued in February this year, formalised algorithmic trading, but restricted it to be used within brokers’ systems by using APIs.

Last month, Groww, India's largest stockbroker by active client base, enabled captive algorithmic trading under its Groww Cloud platform.

Nanda said that most bank-brokerages were cautious because of the lack of regulatory clarity.

“People had algos, and the space was evolving over the last few years. But the space was not becoming big as it was a little grey area without any regulation. I think it is all in the open and we thought it was time for Kotak to go all out,” he added.

Industry estimates suggest that around 3 percent of brokerage volumes come through algorithmic trading. But these customers are highly evolved and are high-net-worth individuals.

Kotak is also looking to officially launch its artificial intelligence tool called Neome over the next few weeks, which can help customers to research and invest better. The company also has a Model Context Protocol (MCP) solution similar to what Zerodha and Groww are offering their clients.

“It will answer all your questions on the fundamental side for now. And it is being trained on the technical side as well,” Nanda said.

He feels that the regulations on AI is evolving as the regulator and the brokers are still learning. “I think more guidelines, more guardrails, I think those policies will keep evolving and coming,” Nanda added.

Interestingly, most bank-based full service brokers have not seen an active user erosion that the the top four discount brokers have seen during 2025. The digital brokers saw their active investor count drop by four million, owing to SEBI regulations restricting F & O trading.

Kotak Securities has seen its active investors stay stable during the last year, even though the stock market indices are yet to attain the peaks those reached last year.

“We have never gone overboard in acquiring customers. Digital players who have been spending a lot on performance and branding and getting a lot of customers and many of them have not been very serious customers,” Nanda said.

According to him, while discount brokers acquire 100 customers, they aim to retain around 20 of them over long term, while that metric is around 40 for bank brokers.

“We acquire a lot of our customers from the bank. Earlier, the number used to be very high, but now we are acquiring from open market as well. Around 50 percent of our customers come from the bank,” Nanda said.

Kotak Mahindra Bank launched stockbroking around 30 years ago with a largely physical relationship-led model until 2018-19. During the period, Zerodha gained scale while Angel One was moving towards a digital-first model, which prompted Kotak Securities to launch the Kotak Neo app.

“We are not category creators. We are more about cross-selling it to our banking customers,” Nanda said.

However, to attract young and digital native customers, Kotak is offering free equity delivery to users below 30 years of age.

“It is because they want to try new technologies, and one reason why we have made API zero. Also, we want a customer who is probably not digitally savvy to become digitally savvy and try new technologies,” Nanda said.