Zerodha Not feels discount broker for Options trader

#1

Hi,
When I sign up with zerodha, i felt it is discount broker. Also i was begineer as trader, and I didn’t have any knowledge about trading charges and trusted zerodha.

Now I am Options trader, and I feel zerodha is charging very high 20₹ per order for options.
Whereas other brokers are charging less.
5paisa 10₹ per order
Angel broking 15₹ per order
Tradeplus 9₹ per order
Even some new trend also started as fixed monthly brokerage .
Does zerodha thinking in any such direction? @nithin

#2

Most F&O contracts today are over Rs5lks, so even if you were someone who traded only 1 lot, buy and sell would mean a minimum Rs 10lks and Rs 40 (20+20) is like 0.004% of the contract. The impact cost is most of the times much higher than what we charge (difference between the bid and ask). Even other charges like STT, Stamp, exchange charges are higher. For any business to sustain in the long run, it has to earn, otherwise eventually it will stop. As a customer trading, We started with Rs 20/order back in 2010, even inflation adjusted, ideally we should have been atleast twice as much today. Yes there are other really small brokers today trying to do this at lower costs, but that is because they have no other way to catch up with us. Their product is still way behind, so it has to be lower cost.

We have no idea to lower the fees,. Btw fixed monthly fees isn’t a right business model, in our business there is an effort that goes into supporting every trade, so revenue has to go up with the number of trades. The effort per order irrespective of the size remains the same, hence we charge a flat fees per order unlike others who charge %.

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#3

Thank you for detailed clarification.
You have said for order which has turnover for 10lks. But when some retail trader who is trading only one lot of say nifty options which has 75 qty and traded buy price of say 50 and sell price of say 65 has 1125 as M2M. If that person take 5 trades per day it will cost him flat 200₹ brokerage wheras all trades may not profitable. And also may give profit of 2-3or 5 points profit.
In above scenario brokerage column is the highest weighted in contract note and not the other expense like GST, STT etc.
Angel and 5paisa are not small broker but are holding large volume of customer and have rich history as well. In 2010, zerodha attracted by many clients based on their discounted policy, but now after 10 years their are so many others have came on same or even more discounted level.
When talking about products, traders mostly use trading software like Nest/NOW, for analysis Amibroker and APIs are also available on cheap rate from many brokers. Nowadays some small retail traders also using the same.
For trader like me, ₹1000-₹2000 profit is enough for me as a passive income.
So they may use your platform and products for viewing and analysis but may take trade from somewhere else using this standard trading softwares.
Hence, just diverted your focus on this issue. Rest is upto you and your team.

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#4

I too feel Zerodha is very expansive. You can check my account RJ0247 to find how much I pay. I am planning to switch to cheaper alternative unless zerodha reduces brokerage.