A lot of people park a lot of idle funds with Zerodha, including me. Kindly advice on where Zerodha keeps these funds, and with which bank?
Normally I would never ask this question, but these are not normal times. Also, does Zerodha have a proprietary desk that it uses for internal trading? Is there a Chinese wall between Zerodha prop desk and customer funds and trading platform?
Apologies for sounding uncertain, long time customer but worried now.
The conspiracy theories that we are subjected to is never-ending. We had recently shared this blog post trying to answer them. If you haven’t read it, please do. Coming back to the above particular issue on client securities, we operate in a completely transparent manner, and here is why you needn’t be concerned.
Zero debt: Firstly, most financial irregularities have debt as the main catalyst – borrowed money that needs to be repaid. We at Zerodha have had zero debt right from the beginning.
We have done no margin funding till date and when we start, we will have no legacy issues in following the SEBI June 2019 circular that requires funding to be only through own funds.
Forget pledging client securities to NBFCs, we do not even keep client securities in our pool account. All client securities are always in their respective Demats at all times.
We have one single brokerage deal for all our customers. We don’t distinguish HNIs from others. We have never advised or sold any product promising returns. The only thing we do as a business is to offer execution platforms for someone who has an intent to buy/sell. No conflict of interest.
By having a single deal for all, our operational risks are reduced significantly.
We have never had issues in terms of securities not being credited to our clients’ Demat accounts, securities being moved out without authorization, or with client fund payouts.
Our own funds are over 25% of all our client funds put together. This has to be among the highest in the industry in terms of skin in the game, all accrued from organic revenue. Zero external funding or borrowing.
Our banking exposure is only to HDFC Bank and Government securities. As safe as it can get.
We have stopped prop trading in Zerodha completely.
For retail investors investing in G-Sec through Coin; the maturity value of G-Sec gets credited to the linked bank account. Assuming one’s demat is linked with SB account of a troubled entity like YES Bank ; What best recourse retail investors/HNIs can take to ensure safety of one’s hard earned money ?
ah that is you pledging your securities to NSCCL for getting margins to trade F&O. We are just being the conduit there. That is different from what I was pointing out. Btw, SEBI has changed that process as well. From June 1st, even if you are pledging to get margins for F&O, the securities will sit in your demat account.
Please can one explain me how safe it is to keep money in Zerodha? I mean money invested in stocks through Zerodha but money that is idle (margin).
What if company closes? will I loose all my margin available in Zerodha ?
what if there is recession and sebi instructs Zerodha not to allow traders to use their available margin ?
What if company runs away with all money from traders margin available?
After seeing such huge global crashes for first time in my life, and pandemic covid19, I started thinking in multi dimensional way and ended with so many questions. So please don’t take this question in negative way.
Sorry this is an old topic but I need to know whether you have switched over to Yes Bank recently or not? I did a funds transfer and in the statement I see that I received funds from Yes Bank and not HDFC which used to be the case earlier. Is it safe?
Recent transfer: NEFT/N2532107494XXXXX/ZERODHA B/YES BANK
In Mar 21: NEFT/N0702114364XXXXX/ZERODHA B/HDFC BAN.