Is there any incentive to a broker like zerodha with a client who has a big account size (say a few crores), who utilizes his full capital to trade (only margin trading, i.e. futures and selling options) but the order sizes are big and the number of orders is less (because they charge on per order basis). Is there any other advantage other than brokerage?
Although I think discount brokerages do get benefits of big client’s. Since the brokerage is nominal but suppose some one has one crore rupee in his trading account and the fund is just utilized for f&o positions . And lots of people do delivery buying worth multiple times in equity segment. And they are going to pay 18percent per annum on that debt.
All brokerages have to pay money to the exchange but those account who carry credit in big sum helps to attract interest income on others debt . And brokerage firms make money without any hassle .
1 Like
I actually meant only derivatives. Added that to the question, thanks!
Would really appreciate if @nithin could throw some insight .
There aren’t any other benefits by having big clients in our discounted business model. Big clients actually in a way don’t fit well into this kind of a business model because
-
Us earning the same Rs 20, we have to take much bigger risks with a big client. If a big client takes 100 banknifty future lots position paying us Rs 20, he is lot more riskier than the client who takes a 10 lot position paying us Rs 20 also.
-
A big client is typically spoilt for choice by traditional brokerage firms. If you have a few crores and take big positions, traditional brokerage firms will give you everything under the sun to keep you happy. We on the other hand would treat the person with 10 crores and with Rs 1lk equally. Many big clients don’t really like that we can’t offer them anything different to what we offer the rest of our clients.
5 Likes