Zerodha to end 0 brokerage structure? 'We will have to...' - Nithin Kamath on SEBI's 'true to the label' circular

zerodha to end 0 brokerage structure? 'we will have to...' - nithin kamath on sebi's 'true to the label' mii charges circular

Zerodha Zero Brokerage Structure: In what might come as a setback to the users of stock broking platform Zerodha, the company might soon end its 0 brokerage structure. Co-founder and CEO Nithin Kamath on Tuesday dropped a hint about the same, day after SEBI issued its “true to the label” circular.

Capital market regulator Securities and Exchange Board of India on Monday said the charges levied by market infrastructure institutions like stock exchanges, clearing corporations and depositories should be uniform and not based on volumes. It also directed stock exchanges and other MIIs to discontinue with the practice of levying slab-wise fee structures.

Reacting to the same, Kamath said SEBI’s latest circular mandating all market infrastructure institutions, like stock exchanges, to be "true to the label" in how they levy charges, has a significant impact on brokers, traders, and investors.

“Stock exchanges charge transaction fees based on the overall turnover contributed by brokers. 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, which goes to brokers,” he stated, adding such rebates are common.

Zerodha Zero Brokerage Structure

So, does the latest SEBI circular mean an end to the zero brokerage structure of the platform? “We were one of the last remaining brokers that offered free equity delivery trades. We could do this because F&O trading revenues were subsiding equity delivery investors,” Kamath noted.

With the new SEBI circular, Zerodha will, in all likelihood, have to let go of the zero brokerage structure and/or increase brokerage for F&O trades, according to its CEO. “Brokers across the industry will also have to tweak their pricing.”