I'm glad that Zerodha is financially strong in a challenging environment. But why the change in minimum brokerage?

+1. Business needs to do whatever it can to survive in these times - it is really easy to ask for free services but really difficult to provide. And if these minor changes in brokerage are really impacting a trader’s profitability then they probably ought not be trading.

2 Likes

Today, Fri, 9-4-2020 at 09:09 PM, I Posted this in General Category, thought I should Post it here.

Dear NITHIN,

GREETINGS to YOU ALL.

Read Your Bulletin - COVID-19 — What we’re doing (Bulletin, 09 Apr 2020, 07:02 PM).

ZERODHA You are GREAT. PROUD to be Your Client, thereby minuscule PARTICIPATION from each of we Clients thru ZERODHA.

I Wrote to You for the 1st Time, on Tue, 7-Apr-20, prompted by Your Mail on 6-Apr-2020, 9:42 PM - Important updates — April 2020, with my Query Why the INCREASE in Equity Intraday Minimum Brokerage from 0.01% to 0.03% ?

Regards & Lots of Love.
Arun.

The ZERODHA BULLETIN I referred in my Post above, COPIED below for the convenience of whoever have not Seen / Read it.

Bulletin

09 Apr 2020, 07:02 PM

COVID-19 — What we’re doing

We are witnessing an unprecedented level of societal & economic disruption across the world. Something of this magnitude requires rethinking & participation from each of us. We have to do whatever we can. We have begun by allocating Rs 25 crores towards COVIDー19 relief spanning multiple areas. Starting with:

  • Contributions to the PM CARES fund
  • Distributing 15,000 meals daily to the needy in Bengaluru
  • Supporting BMC Hospital (designated COVID hospital for Bangalore)
  • Contributions to the ACT fund set up by the VC community, and
  • A pilot project on UBI (Universal Basic Income).

Dear Nithin,
It is really a very sorry affairs to know abiut increase in the intraday equity brokerage by Zerodha as I have just joined about 20 days back Zerodha on someone’s recommendation that it is good for small investor / trader like me. However, just within one month of opening my account 300% increase in brokerage is like someone cheated me. Further, your email sounds like you have made the decision on purely considering from business angel and not due to the prevailing conditions throughout the world. However, if you still think that many of us who joined zerodha recently would not regret our decision of joining zerodha and move back to other brokerage firms, I appeal to consider the following options:
If you cannot rollback the entire increase, atleast make brokerage (intraday) @0.02% instead of 0.03%.

Further, if still you cannot rollback this increase, the maximum brokerage per order may be decreased from 20 to 10.

You can also consider levying a minimum charge of Rs. 5 per order as other brokerage firms do. I think this will be the right choice considering the example of very small amount of trade like Rs. 1000 quoted by you.

And even after so many years in the market, Zerodha still found it prudent to continue with its decision then there is clear indication of the prime objective of Zerodha.

1 Like

@nithin
Considering the increase in minimum brokerage from 0.01% to 0.03%, it seems that Zerodha doesn’t want small investor to trade or forcing them to go for more quantity. I personally feel that small traders will shy away from trading considering the high cost of executing the trades. It would be great for small investors like me if Zerodha could revise the hike in its minimum brokerage. Hoping something best from Zerodha.

1 Like

Some of our competitors in the low-cost space has been charging from 0.1% (Upstox) to 2.5% (5paisa) for a long time as minimum brokerage. Even at 0.03, we are still a fraction of what they charge. We have thought through this many times before increasing. We started at Rs 20 as max brokerage back in 2010. Even for inflation-adjusted this ideally should have been a lot more by now.

I have already mentioned the reasons why earlier.

4 Likes

I can see that Now Zerodha maximum charges are 40 Rs. You can see that on zerodha calculator

Brother thats 20 for buy and 20 for sell… :man_facepalming:

ohk now i got it but brokerage charges change from 0.01% to 0.03% . thats my real concern . and for small trader like me thats big amount .

Or they can trade with other brokers…everyone has a strategy Nithin and for many people small.amount matters what you’re not realising is by raising brokerage customer also need to pay higher taxes…for example yesterday I traded a volume of 7.5 lks buy and sell but in different stocks none above 1 lakh so I had to pay a brokerage of 227 approx and over that brokerage charges of 115…total adds upto 400…my profit was 1475 but I got only 1070 back in my account.you can see my contract note… if brokerage was 1paise my profit would have been above 1350 so I lost almost 30% of yesterday’s profit because of increase in brokerage and that is a hit so don’t suggest if we should trade or not…

1 Like

Dear Nithin, I am with zerodha for quite some years now and when it is recessionary period and entire world is going through rought time suddenly after 10 years you realise that intraday trades cause issue and you should raise the brokerage on them? The reason why brokerage is increased is because you know small traders are not giving enough revenue and even if you loose a chunk of them it won’t be a problem as majority of revenue is coming from FnO trading for you…I feel the justification doesn’t add up because you’re missing out on a point that even though delivery is zero brokerage you still charge 15.66rs as demat charges irrespective of quantity so small traders get affected their as they don’t trade in volumes and if they buy 3-4 shares they have to pay 15.65 extra which affect the return.
Secondly your rise in minimum brokerage has also affected small traders because small intraday traders who can trade in small quantities though get many chances to trade will have to pay alot of brokerage.
If you say suddenly after 10 years when businesses are going through bad times you have realised that increasing brokerage is necessary then this doesn’t add up instead just tell us that you’re sound and you have enough cash reserve so people should pay more the be with you…it might sound rude but this is what I can gather from you increasing the brokerage.

Do you go complain when the price of milk, biscuits, cigarettes etc increase?

I will complain when it is increased only for people who are not buying bulk quantities… inflation is for everyone but changing the business strategies so that you’re not affecting people who gives you more brokerage then if I am affected by that decision I have all the right to give my feedback so it shouldn’t bother you to poke your nose into someone else feedback meant for someone else…minding ur own business is one of the best thing we can learn in trading so please learn that…

1 Like

In a study by Statistic Brain,

the failure rate of all U.S. companies after 5 years was over 50 percent, and over 70 percent after 10 years.

Why Some Startups Succeed (and Why Most Fail)

Hi Nithin,
If I place a Limit Order to buy 199 shares of company “A” which trades at 1000. However, the market continuously moves and my order gets fills in small chunks like 50, 100, 35, 19. Is in this case still maximum brokerage of Rs 20 get charged?

“Unlike equity delivery trades which bring no risk on the table as the customer puts in 100% of money upfront, intraday trades also bring in risk on the table. When clients have taken positions using leverage if the stock falls more than the margin that is provided, the risk shifts to the brokerage firm. In essence, it is almost like an insurance business…”
I am sorry, this argument sounds flawed. Reducing margins to the customer, not only reduce your risk but also risk to your customer. Give 1000 x margin and charge high brokerages is just profit marking not risk mitigation argument.

It doesn’t sound logical as I am sure, there will be the cost of modifying and canceling orders.
And even if the size of the trade is big enough, the size of the order would never get big enough, it gets optimal execution.

Right.

What you are trying to convey here?

Hmm… our leverages are the least in the industry. You as a client has an option to use it or not, or even do any intraday trading at all in the first place. I had written this post yesterday on why brokerages need to earn enough on every leveraged trade to cover for the risk the business brings in, do check it out.

1 Like