Why is Zerodha claiming all these rules and regulations, when others aren't?

Just got this from a tradingqna user, and since it has come up many times, I thought let me answer.



Had a conversations with many brokers, sub brokers, HNI traders over the weekend.
Everybody were adamant that there is no change in intraday leverage system.
So its @nithin vs all now.
One friend reminded me of “Referral program”, “opentrade”, “brokerage refund”, “60-days challenge”.
Somethings which zerodha discontinued long back claiming to be illegal. (The idea I got was somebody of authority told about this illegality to Nithin Sir over informal meeting “chai pe charcha”)
These things still continues with other brokers.
Zerodha has silently closed 60 day challenge brokerage refund!

So as per them, with @nithin its always been over cautious, sometimes deliberate. And it’s always been “can and could” with him.

We will know only after Wednesday meeting though!


I didn’t want to post it here, but since you keep bringing it up, here is the link to the conference call that NSE had last thursday with all the members on this topic. All your broker friends would have been on this call. Let me know if you still have any confusion after this, maybe you should share this and ask why they are lying.

Other points

  1. Opentrade was stopped because we were asked if people sharing trades on the platform were investment advisors as they can circumvent IA regulations by being on the platform and collect money. Which was a valid point and there was no way to solve it, we had to stop.
  2. 60 day brokerage refund was stopped after SEBI circular (post Indian trading league) that clearly said that there should be no cash or incentive or reward that broker can offer that can induce people to trade. Brokerage refund was doing it, and hence we had to stop. (Let me pull up the circular and share it here)
  3. Client referral was pointed out during inspection and said there was no specific regulation that allowed you to share, so you should stop. We pushed for it and NSE just put out a circular last week allowing this. We are starting this again this week.

These are all initiatives which were extremely successful and helping the business grow, when we stopped we took a hit.

As you’d imagine a lot of competitors keep complaining against almost everything we do with the regulator. So we are forced to be more compliant than everyone else, which we don’t have a problem and I hope our clients appreciate. Your brokerage firm, like a bank, is in a way custodian to your funds and securities, you would not want the firm to be the kinds who blatantly violates rules and regulations.


Zerodha tries to keep business clean, keep it this way only. Thanks.
Customers actually like that.
The problem is with SEBI’s adhoc way of forming rules.


good work Nithin ji

I would prefer my brokers to be compliant and transparent than be negligent and mess with regulations.



Appreciate it very much. Thank you for the response.

A simple like would suffice on the comment , but when you give a honest and clear response like this. I have to type it out…


Liked the last part of the call where the official replies to the question on consequences of ‘mistakenly’ not collecting margin upfront for intraday trades - He goes like - “WHY ARE YOU ASKING ABOUT BREAKING THE PROVISION OF THE CIRCULAR? RIGHT NOW WE ARE ONLY INSPECTING END OF DAY MARGIN REPORTING - WE MAY ALSO START INSPECTING INTRADAY - IF FOUND THAT MARGIN COLLECTION IS NOT DONE - IT WILL BE CONSIDERED A VIOLATION” - In simple language - Circular follow karna ich padega! No if’s and but’s - period!
#DobaaraMatPoochna :slight_smile:

@nithin @siva when can we expect this client referral incentive to be live again :no_mouth:

Hopefully this week.

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Great job nithin. Zerodha is the best.

I love zerodha , @nithin sir please bee on rules , if my money want to safe means My broker want to clean , Zerodha is clean in a ways i like . i have peacefull nights :+1:


You are the Best. World Class

@siva @nithin Any specific deadline can we expect by 20th of January ?

Feb 17th is when I think this peak margin reporting will most likely have to start. So I am guessing that is like the deadline.

Have explained peak margin bit here

@nithin what about margin reduction for headed strategies . Will they be live in January.
Also does zerodha has necessary infrastructure and rms to support this after receiving nod from regulators.

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SEBI has something called a RMRC (Risk management review) committee, that is scheduled to meet this month when the decision will be taken. What is going to be agreed will not be extremely aggressive (strategies requiring only max loss), so I am guessing most brokerage firms RMS will be ready in quick time.


@siva @nithin any specific deadline also for restarting of referral incentives :no_mouth:

All accounts referred from Jan1st 2020 will along with our rewards also get this additional 10% brokerage incentive.

We will be announcing this on monday.

What bigger can be testimony of success for an entrepreneur when they are called out for following rules. It calls for a big long week celebration. On a serious note:

  1. The funny brouhaha over leverage, more so targeting brokers is actually like targeting a TV analyst for market collapse. The rules of the games are not decided by brokers, neither any single constituent.
  2. It reminds the cabal of 80’s and 90’s of BSE who were trying to run parallel banking system through margin funding, badla financing etc. Apparently with SEBI it was assumed that the cabal holds no more influence, looks like now few left out!
  3. Leveraged instruments doesn’t take away either inherent risk or even residual risk as the exposure remains same. Worst is self attempted funding by few brokers to provide money for the leverage. If you try to get into NBFC or banking activities expect more screws and regulations on you. The rules will become tighter and tighter.

Rather than blaming rules trading or investing doesn’t require one to be leveraged. Under capitalisation can be overcome by systematic achievement of higher expectancy of a system over a period of time. Leverage helps but then again it’s a facility given, not part of basic rules of auction place.

I have realised a beauty of discount brokers (including Zerodha), it reinforce self discipline in maintaining your risk management. Unless one has terrible accuracy record your chances of going bust is almost zero. When your risk of ruin is zero , you won half of battle already, thanks to your broker.