For traders mostly placing MIS intraday orders in small quantity, the brokerage becomes a big hurdle to scalp profitably. Combined with the STT / taxes and auto-square off charges etc, zerodha only remains viable for traders dealing in larger quantities.
If zerodha reduces brokerage , then influx of smaller traders will improve. Volumes will improve also.
Now, the question arises how does zerodha cover the operational costs then ? There can be several alternate sources of revenue :
advertisements ( by voluntary opt-in in exchange for reduced brokerage)
user participation in surveys / users consenting to donation of their user data
monthly subscription plans for brokerage at reduced rates
paid add ons / tools / books / education resources
an alternate Lite version of zerodha for basic users having reduced functionality , limited customer support and slower servers.
pooled trading. A system where different traders who want to take the same trade can combine their order of small quantities into a single large order ( just like car pool service ).
(This would be advantageous only if it reduces overhead costs for zerodha, because i don’t know how much an order “costs” for zerodha , i.e. the expenses involved in processing it)
coordinating with exchange for selectively reducing brokerage for small cap stocks , to enhance liquidity and improve market efficiency.
User trust and privacy come first. We’d never monetize them.
This can nudge people towards overtrading, more order placements isn’t always good for the customer. Also, this doesn’t sustain long term either.
Our approach has been to make educational resources openly available, rather than using them for monetization or data capture.
Platform performance, reliability, and robustness aren’t features we’d differentiate across user segments. Everyone should have the same experience.
Lite version is something we can explore. However, not sure on pricing bit.
Regulations don’t permit this. It isn’t practical from an execution standpoint either.
It doesn’t add meaningful value. A stock should be chosen for its merits, not because it’s cheaper to trade.
thank you for the elaborate reply. I’ll write some counter-points, not to argue but just to debate.
Some users don’t mind ads, rather they enjoy them. And some brokers have 2 sub products , a full service brokerage app , and a discount brokerage , parent company being the same. Eg IIFL & 5 paisa . Yes it breaks the experience but user has a choice.
User is voluntarily donating their data, not forcefully. And some users have free time and like to help by participating in surveys to support the cause and for earning freebies.
the current structure of fixed brokerage per order nudges users towards taking larger quantities / lots in a single order, which isn’t always good for customer either. Maybe traders who make larger orders should pay more brokerage.
Some people don’t value education unless they pay for it. Content creators put more effort if sufficiently incentivized.
Equality is a very ethical idea but not so practical to devote same manpower of customer support executives to an influential user of net worth 100 crores vs an insignificant user of 10 lakhs net worth only. And also a user who does more frequent F&o trades and generates more revenue for zerodha should be prioritized from a business standpoint.
My intention is not to seek support but contribute ideas from which value can be derived to support the zerodha mission. I apologize if i wasted time of customer support. These discussions are pleasantly intellectually stimulating for me.
