The problem is these companies do not know how to sell their product.
Kotak’s FIT plan is uber cool and could be a disruptive.
But these aristocrats do not know how to market to the common people in India.
Axis had a similar offer few months back, but they failed to attract clients.
Unless they start being transparent on the Intraday leverage for shares, fno ,and write it in big letters on their site, like rest of the discount brokers do. They are not going to sell this product.
On the other hand, their current high revenue generating clients will shift to this plan , and they will net loose out on revenue with these kind of offers.
@Nabarun_Chakraborty I assume SEBI bought in a new rule not to give discounts or any rewards for investing (mutual funds) or any financial instruments. May be that was the reason for stopping the challenge.
Their interface is bound to have the glitches because @nithin is not upgrading their IT infrastructure to an extent that it can handle that amount of customer with proper load balancing.
They are not certainly trading against customers. Here is an counter theory based on same hypothesis then -
Get 10 people.
Give them 10k each.
Ask them to do any trade.
Make a chromedriver scanner using .net which scans the orderbooks to check orders.
Fire reverse orders of what they do but use 2x capital now.
As 90% of them are bound to lose money. This hypothesis should make you money too. People love conspiracy theories because it is an excuse to cover the loss. One needs to acknowledge the fact that Zerodha will not work in volatility like upcoming budget day! So he needs to prepare ahead for that.
@unofficed what’s the Chrome driver scanner. I see you have mentioned it elsewhere too…is it some sort of virtual scanner/software scanner capable of OCR?
You mentioned “ Nominal brokerage of just 1 paisa per scrip will be levied on your trade that will substantially reduce your cost of trading.”. But you didn’t mentioned that whether the GST will be levied against the 1paisa brokerage or their regular brokerage?
You didn’t mentioned how they bill their GST to you and how they show it to their auditor…can you throw some light on this.
In USA there is 0 brokerage system this is not possible in INDIA because SEBI has closed all doers from broker to earn money after the karvy fraud.
I would like to first give a brief what SEBI has done till now and then give my view what they are planning to.
Earlier broker used to have pledge stock in their account which they used to pledge with NBFC. The money they used to get from NBFC was given to client. Interest difference was their profit. Now they cannot pledge with NBFC and the shares are in depositary so now it is brokers money give to client.
Idle balance in trading account was earning interest from broke. Now there is quarterly settlement, client can even choose monthly settlement.This source of revenue also gone.
In india broker has to send all orders to exchange where as in USA it can be sent to HFT (high frequency traders) and these HFT offer rebate to brokers for sharing this data(order flow).This is not allowed in india so again this source of revenue also gone.
Because of CDSL and NSDL brokers cannot do security lending. In US all securities are held in their brokers name.
SEBI introduced the new margin rule which was again a big dent to these brokerage companies.
SEBI was preparing brokers for ASBA by introducing quarterly settlement. Once ASBA gets introduced the brokers are just messenger who are sharing clients trade real time with exchange. Again ASBA will be a big blow.
The biggest asset of a brokerage firm is CLIENT DATA and all the data of real time order both of this is being shared with SEBI, Exchanges and depositary. SEBI is building its own ecosystem. They have choked all the broker from all sides and the day they come with T settlement and ASBA that is the end of discount broker.
SEBI can start a direct trading platform free of cost where there is involvement of BANK,SEBI,EXCHANGE,DEPOSITARY. Where is the need of brokers? This is my first case where I see discount broker being finished.
CASE 2- Even If SEBI does not introduce direct trading for sure ASBA is coming. In this case there is going to be panic among brokers and only those brokerage firm will survive who have maximum active client. Every broker is going to give there level best to get more clients. So what is the best way to attract clients? decrease brokerage. In this case out of 500+ active brokerage house only 1 or 2 will survive.
CASE 3- Suppose ASBA is not introduced. Now if you see in Kolkata it is easier to open a brokerage firm than a pani puri stall. There is extremely low barrier to entry. For sure in the next 5yrs there is a new company going to come with a sustainable 0 brokerage business model and disrupt this industry. Who thought 10yrs back that discount brokers will rule?
@nithin Plz share your VIEW on ASBA being considered for trading. How do you see discount broker future in india
