Retail traders and investors watch out - Are brokers like Zerodha counter trading?


Oh, I wasn’t expecting it to be that bad ratio. But, looking at the responses you seem to be bang on.

Very good advice. I try that and these are overflows of that attempt :joy:


Thanks @nithin sir for responding. The reason for many brokers moving out could be also due to advantage of scale, access to data not there with them that zerodha, icicidirect etc have ?
Does zerodha sell or make use of any client data like funds, stop loss, AMO orders etc. directly or indirectly through other related or unrelated organisations in real time or as a data dump? Especially that could potentially disadvantage retail participants ( traders & investors).
The SEBI guidelines may not cover everything but there is morality aspect to it. What about possibility of other big players doing such things?


@Neostar there is nothing we can do today that can put retail traders and investors at a disadvantage. Have already explained earlier.

The last remaining advantage of being a broker until a few months back was that brokers for their prop trading could take positions in F&O only using SPAN margin. They could even hold these overnight with just SPAN. Typically the clearing member would fund the exposure margin for a cost(interest). SEBI has taken this option out as well recently. 100% of SPAN + Exposure is required to hold positions at every point of time. Clearing members can’t fund exposure margins anymore.

The day is not far when brokerage firms will not be able to give any additional intraday leverage to traders (MIS,BO, CO) etc.

There is now an exodus with lot of brokers giving back their licenses. These aren’t just retail brokerage firms, but also just pure prop trading firms. The compliance costs are huge and with no advantage it doesn’t make sense to remain a brokerage firm anymore. Many of these guys reach us out to open trading accounts.


@nithin could you elaborate this please. you mean to say current intraday leverage to be removed?


Today, if margin to trade Nifty is 80k, you can trade them using MIS with around 40% of this or around 32k. The brokerage firm is essentially funding the remaining 38k for intraday. SEBI disallowed clearing members to fund trading members for intraday also. It is only matter of time when brokers/trading members won’t be allowed to do this for their clients.


@nithin this would be applied to equity stocks as well?


Equities or stock trading on leverage is okay, because money or stocks has to be settled only next day. So there is no requirement to have full funds or stocks when entering a trade.


its getting way out of hand.
@nithin Zerodha should go public (Newspaper/Newschannel) with specifying it.


Btw, check this article


Youmust remember when u buy other real guy is selling.his expecting to win and u too, some time u winning and u dint take profit then it cuane to loss, its u who dint take profit in the mean time.

When u r lising ur opposite seller is winning,if he wont book profit he will lise aswell some how, and ithats it ,its all risk management and profit taking and stoploss


Too many conspiracy theories are evolving, its very easy to cook them up :stuck_out_tongue:

Here is one more, the broker will scan and identify all trading accounts that are either consistently losing or in frequent losing streaks and take positions against them :slight_smile:
Apparently, they’re betting on the client more than what the underlying actually does.


But this is wrong don’t you think ?These hedge funds know the market sentiment by the execution ,i mean Suppose 100 retailers have taken long position against snp500 fut ,now 99% retailers lose money so citadel takes counter position ,and that’s how these hedge funds make money or they can sell snp options .Whats the point of having tighter spread if ones going to lose , i think it’s not a clean system


Ok @nithin so you are saying zerodha doesn’t sell or make use of data like our stop loss, fund balance available, trading style it patterns etc.
Wondering what are the SEBI rules around this. Anyone has any links? Please. Thanks.


I couldn’t find anything on Google preventing stock brokers selling traders & investors data like supplies stop loss, funds, trading pattern, p&l etc.
I am sure there must be some restriction.


Somebody rightly said india is not the country for intelligent people we have to be naive like others and we can be happy how SEB always thinks how to make the markets illiquid???many join IT Services companies and go onsite and settle in foreign countries Or goes for study abroad and settle.


Interestingly no response. May be there is no SEBI guidelines. If that’s the case selling client trading data should be rampant!


As soon as you place an order, you will get an “Exchange order number”.

This is true if you are using NSE now. If you are using zerodha trader or kite etc… then order first reaches the zerodha OMS server. There it is always possible (atleast technically) to get a copy of the order before the order goes to exchange.


This is not correct, the same mechanism for any broker, also we use Thomson Reuters OMS/RMS for routing and they are empanelled vendor with exchnage, their systems and process are well audited and I can assure you nothing as this sort is possible in India for now.


Thanks. Are you saying that after I have logged into kite, when I submit a buy/sell/cancel order, it goes to the thomson reuter server and zerodha is no way comes to know about the orders placed?


I am not sure how you came to conclusion that someone else will see your trades and copy etc but nothing as this sort is possible in India as we don’t have dark pools and all orders has to be submitted to exchange directly, and each order will be given unique order ID by exchange. No front running is possible if you are trading by yourself.