Zerodha may end zero-brokerage model as derivatives curbs slash revenue 40%
While derivatives curbs have dented Zerodha’s topline, the broker's net worth exceeds Rs 13,000 crore.
Zerodha is considering charging fees for equity delivery trades for the first time in its history, as regulatory restrictions on derivatives trading have slashed its brokerage revenues by 40% in the latest quarter, founder Nithin Kamath disclosed Monday.
“Another year where I was pessimistic about the business has passed, and it’s been another year where I’ve been pleasantly surprised. That said, the regulatory actions… will have a significant impact on our revenues and profitability. The time has finally come for business to pivot,” Kamath wrote in a blog post marking Zerodha’s 15th anniversary.
The hit stems from a combination of measures: higher securities transaction tax (STT) on options, the reduction of weekly expiries, the removal of exchange fee rebates, and a general slowdown in market activity. “This risk has now crystallised,” Kamath said, noting that the changes began to bite from October 2024.
The industry has long relied on revenues from options traders, even as Kamath has repeatedly flagged that “90% of traders lose money”
The bigger worry lies ahead. Regulators are evaluating whether to end weekly options trading completely—a move that could obliterate the revenue streams of discount brokers. Kamath warned: “If this were to happen, we would be forced to start charging brokerage for equity delivery trades to make the business tenable. Most of our competitors already charge for delivery trades”
For Zerodha, which has built its reputation on zero-cost equity delivery trades, that would mark a fundamental pivot. Zerodha pioneered the zero-brokerage model for equity investments when it launched in 2010, forcing established players to slash their fees.
It would also ripple across India’s broking landscape, forcing retail investors to rethink trading habits built on cheap access to derivatives. India's options trading volumes had surged to record levels, with retail investors increasingly treating derivatives as lottery tickets rather than hedging instruments.
While derivatives curbs have dented Zerodha’s topline, the broker remains among the most financially robust players in the industry. Zerodha’s net worth exceeds Rs 13,000 crore ($1.56 billion), equal to more than 50% of the client funds it handles on any given day, the company said.
The firm has no debt and, as a privately held entity, carries what Kamath describes as “more skin in the game than any other broker in India”
The company is extending beyond broking. Its Rainmatter fund, once fintech-focused, is now investing in climate, health, media, and deep tech. Kamath said, “We continue to allocate 10% of everything we earn to invest in societal and environmental well-being and to support social entrepreneurs”
On its 15th anniversary, Zerodha unveiled the Rs 100 crore Zerodha Rewilding Fund, starting with an 800-acre restoration project in Maharashtra’s Tadoba region in partnership with the state forest department and NGOs.
Zerodha now oversees assets equal to about 10% of India’s retail and HNI AUM, though its share of the NSE’s active client base has slipped. The firm has attributed that decline partly to rivals using “notifications and dark patterns” to nudge trading activity, tactics Zerodha has avoided.
At the same time, its new products are finding traction: the Margin Trading Facility (MTF), launched just nine months ago, has already captured around 5% market share with a Rs 5,000 crore book.
Edited by Jyoti Narayan