Zerodha Brokerage Fee to Increase! Zero-brokerage to end soon

Zerodha, one of the biggest discount brokers in the country might soon have to increase charges for F&O trades. As an impact of a recent circular by SEBI, Zerodha will likely end zero brokerage on equity delivery. The effect of the same will be likely noticeable across many brokers in the country such as Groww, Upstox, etc.

“With the new circular, we will, in all likelihood, have to let go of the zero brokerage structure and/or increase brokerage for F&O trades. Brokers across the industry will also have to tweak their pricing” said Nithin Kamath, the co-founder of Zerodha.

Here’s everything you need to know about Zerodha increasing its fee for F&O trades or Zerodha ending zero brokerage fees for its users.

SEBI (Securities and Exchange Board in India) on July 1st released a circular with the subject “Charges levied by Market Infrastructure Institutions – True to Label”

In short, this new SEBI circular on brokerage charges implied that MII should receive the same amount of fees from its members ((i.e. stock brokers, depository participants, clearing members) charged to clients (customers) to bring more transparency and fairness.

Until now, stock brokers use to pay MII on a monthly basis as per their volume-based, slab-wise charges. This used to help Zerodha receive a rebate that would drive about 10% of their revenue which would directly go to the broker’s pockets. As a result, Zerodha was able to offer zero brokerage fee equity delivery trades.

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.

Now with the new SEBI circular, MII will need to receive the same charges levied to the end customer leaving no room for any extra rebate for stock brokers.

As a result of this circular, Zerodha and other brokers might soon in all likelihood have to increase their brokerage fees.

Be sure to grab some savings with Zerodha coupons, rewards and offers. ✔️

The circular outlined that MIIs (Market Infrastructure institutions) must implement uniform, transparent charges for all members (i.e. stock brokers, depository participants, clearing members) ensuring fees charged to clients (customers) match what MIIs receive, effective October 1, 2024.

In simplest terms, MIIs levy volume-based, slab-wise charges on members (stock brokers, depository participants, clearing members). These members collect charges from clients daily but pay MIIs monthly, potentially leading to higher aggregated charges from clients than MIIs receive.

“This can also result in an incorrect or misleading disclosure to the end client about the charges levied by MIIs” said SEBI in its circular

Following is the current list of charges and brokerage fees on Zerodha as of July 2024

So this was all about sharing the new SEBI circular that could make several discount stock brokers in the country to increase their brokerage and fees.

Nithin Kamath, the co-founder of Zerodha said in his X (formerly Twitter) post, “These rebates account for about 10% of our revenues and anywhere between 10-50% of other brokers across the industry. With the new circular, this revenue stream goes away.”

“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.”

SEBI issued a new circular mandating all market infrastructure institutions, like stock exchanges, to be "true to the label" in how they levy charges. This circular has a significant impact on brokers, traders, and investors.

Stock exchanges charge transaction fees based on the…

— Nithin Kamath (@Nithin0dha) July 2, 2024

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