Zerodha's 13th anniversary special AMA with Nithin, Nikhil, Dr.K, Venu and Karthik

[nithin]

@JAGG

• If you could tell the upcoming road map of the products like kite and coins.
• When we will able to see Zerodha’s AMC with smallcase coming live for the users If you could explain more about Zerodha’s AMC?
• Lastly, When can a retailer become a shareholder of Zerodha (may be a reward to Zerodha’s users)?

1. Road map, I had answered here why we don’t put it out. @Meher_Smaran maybe share that link?
2. 3 months from now.
3. Unlikely that we will be listing anytime in the near future. Impossible to give out shares without listing.

[nithin]

@scpulse

@nithin Ji , Is the scope of questions on this AMA limited to Zerodha and its eco-system? Or, will you be happy to entertain questions related to your personal outlook on general aspects of life and philosophy?

Ask anything

[nithin]

@RajendraPatil

My Query is
Are you planning to take up with both KFINTCH,CAMS to do record keeping for MF DMAT mode holding in same format as traditional folio holdings?

1. it will help in getting consolidated report of all transactions in irrespective the holding in DMAT mode or not.
2. On MFCentral DMAT MF holding transactions are not visible as of now. if both KFINTCH,CAMS maintain MF holding in DMAT form same as they maintain in physical form MF holdings, it should be possible.

As zerodhafundhouse is on the verge of launching mutual funds , I think it would be nice gesture if you can work with CAMS,KFINTECH to include MF folios in DMAT format transactions in Consolidated Account Statement as well as in MFC central

@Neelesh can you update on the status on this?

[nithin]

@Venmathi

This query has been already posted in ordinary AMA. It is not answered so far. It is reposted here.
It is purely of academic interest the question is raised. Why does nifty index increase/decrease during the per-open order period. Does mere order placement increases or decreases the Nifty. From 9.08/9.10 to 9.15 it becomes fixed until market opens. Thereafter nifty moves on executed trades and not on order based trades. Does that mean during the order colllection period , orders move the Nifty up and down and when the trade opens the opposite is true. That is, executed orders move the Nifty up and down and also for all shares. Is that the way the algoriithm is set. I could not get a plausible explanation.

Have you checked this

What are pre-market and post-market sessions and orders in NSE and BSE?

[nithin]

@Lotusdew

Zerodha has great tech. What is preventing you from expanding into international markets? I dont think regulations are as tight as in India and you have enough accruals for international expansion. So why wait ?

The underlying market infrastructure is different. How exchanges operate, how data feed works, how settlement works, and everything else is different.

[Meher_Smaran]

Thanks for the questions and love, @JAGG

@JAGG

Fan of Zerodha’s products and the ecosystem have been using it since last 5 years have seen the transformation of the products

1. If you could tell the upcoming road map of the products like kite and coins.

We don’t share the roadmap mainly due to the pace at which the regulatory changes are taking place, Jagadish.

You can check @nithin’s full answer here

Few Enhancement in Zerodha

Our internal roadmap over the last few years has been overridden due to all the regulatory changes which take priority over everything else. Also, as Zerodha, we are, for the first time in India testing the limits of the underlying infrastructure of capital markets. Often, all our focus ends up moving towards reliability vs new features. We have tried to do this in the past, letting customers know that we will do these few things next in our blog posts, but they haven’t played out well as, for…

[Neelesh]

@RajendraPatil

Are you planning to take up with both KFINTCH,CAMS to do record keeping for MF DMAT mode holding in same format as traditional folio holdings?

1. it will help in getting consolidated report of all transactions in irrespective the holding in DMAT mode or not.
2. On MFCentral DMAT MF holding transactions are not visible as of now. if both KFINTCH,CAMS maintain MF holding in DMAT form same as they maintain in physical form MF holdings, it should be possible.

As zerodhafundhouse is on the verge of launching mutual funds , I think it would be nice gesture if you can work with CAMS,KFINTECH to include MF folios in DMAT format transactions in Consolidated Account Statement as well as in MFC central

When mutual fund holdings are stored in dematerialized (demat) mode, the Registrar and Transfer Agent (RTA) retrieves information from the depository on a weekly basis through a BENPOS file. This BENPOS file compiles various data from the Depository, including phone numbers, email addresses, demat information, and more. It’s evident that KFin is successfully updating these details accurately. However, there seems to be an issue with CAMS, as it is not extracting the details in the expected format.

Rest assured, we are actively engaged with the RTA team to address this matter. We are working on resolving this issue for all Zerodha users. Once the resolution is in place, you will be able to access the correct details through any of the RTA channels or the MF Central platform.

[Venmathi]

I read those articles. But one line in NSE website indirectly comes to my point. What I thought of seems to be correct. That is in the pre-open session it is the order placed that counts and in the normal market is it trades executed.

However, I thank you for your reply . I missed the crucial reading now shown as snapshot.

[CrownedEagle]

@nithin

@MohammedFaisal @Prayag maybe something for the first point.

@MohammedFaisal @Prayag
Any update on my 1st question? Regarding Statistics? if it is available at your end…

[NikhilSPareek]

Hi Nithin, belated congratulations to you and your team. All my family members have accounts on ZERODHA.

As I have established that I am a loyal customer, I think I am entitled to suggest you a business idea which your team can consider - this is based more on my personal need.

Have you considered offering ZERODHA like service to NRI’s? I recently moved to UAE and have not come across anything reliable for local / US market investments. Do you think it is a possibility for you guys? With so many Indians out of India, you will get ready customers who will sign up your product for US and ME investment. Just to clarify, I am not looking for a product that allows resident Indians to invest outside India - but a product that is for non-residents who can use it to invest in international markets (lets say US markets / locally in Saudi/ UAE). I am sure there may be regulatory challenges and this would require a commercial willingness and feasibility study for this - but I wanted to tell you that there is a potential market (and possibly a low hanging fruit for ZERODHA given its goodwill) for this as well in case you guys decide to fill in the vacuum.

Thanks,
Nikhil (your another Indian brother)

[nithin]

@NikhilSPareek

Have you considered offering ZERODHA like service to NRI’s? I recently moved to UAE and have not come across anything reliable for local / US market investments. Do you think it is a possibility for you guys? With so many Indians out of India, you will get ready customers who will sign up your product for US and ME investment. Just to clarify, I am not looking for a product that allows resident Indians to invest outside India - but a product that is for non-residents who can use it to invest in international markets (lets say US markets / locally in Saudi/ UAE). I am sure there may be regulatory challenges and this would require a commercial willingness and feasibility study for this - but I wanted to tell you that there is a potential market (and possibly a low hanging fruit for ZERODHA given its goodwill) for this as well in case you guys decide to fill in the vacuum.

Thanks, Nikhil for the kind words.

NRI, to invest in Indian markets, we have an offering.

Signup and open an NRI Zerodha trading and demat account online and start...

If you are an NRI(or Indian) looking to invest in international markets, we don’t have a product. Unlikely that we will work on anything, given the new TCS rule for any money being remitted outside India. And building this only for NRIs is not something that we will want to pursue as of now.

[NikhilSPareek]

Thanks for the prompt response - however, new TCS rule should not apply to NRIs or other foreigners investing with money they have earned outside India. That said, I understand it is a business decision - also, given that Indian market is already so lucrative. But I think successful companies like yours can easily go global to tap the underlying potential of large Indian community living outside India.

Thanks,
Nikhil

[nithin]

@NikhilSPareek

Thanks for the prompt response - however, new TCS rule should not apply to NRIs or other foreigners investing with money they have earned outside India. That said, I understand it is a business decision - also, given that Indian market is already so lucrative. But I think successful companies like yours can easily go global to tap the underlying potential of large Indian community living outside India.

Thanks,
Nikhil

Our NRI customer base is tiny today. This is mainly because it is tough for NRIs to open accounts to invest in local Indian markets. We have been requesting to ease this out. Whenever that happens and we can build a large enough NRI customer base, we can build on our offerings.

[BornArcher8]

Any update on EGR (Electronic Gold Receipts) trading in kite?

[Manu_Manjunath.K.R]

There is no trades and liquidity in the segment.
Check BSE trades. Hardly any trade. It needs to be enabled at broker’s end and more information to clients by exchange, brokers should be given. Then liquidity will come

[BornArcher8]

Exactly only if big brokers like Zerodha support it will some liquidity come. Right now retail brokers are supporting ERGs as far as I know.

[VarunG]

1. How do you guys handle pressure when volatile days are happening?

2. Do you have mirrors of kite server ?

3. What are your preparations for a black swan event ?

4. What are the features you can implement within SEBI regulations, that can withstand what competitors offers ? , eg. I would love to see a trusted device option , so that we can two login instenses same time , regardless of web / app versions.

[Athul_Ajai]

I have read the article on “Trading with other people’s money” posted by Zerodha. I have got a small doubt after reading it. Do I need to register as a company to collect money from family or friends if the collected money is below 10 lakhs. As the amount is small, is it illegal if I trade with the mentioned amount in a single trading account and give the already agreed upon profit percentage to the investors annually and keep the rest with myself ?

[nithin]

@VarunG

• How do you guys handle pressure when volatile days are happening?
• Do you have mirrors of kite server ?
• What are your preparations for a black swan event ?
• What are the features you can implement within SEBI regulations, that can withstand what competitors offers ? , eg. I would love to see a trusted device option , so that we can two login instenses same time , regardless of web / app versions.

1. Hmmm… used to it now.
2. Yeah, there are backups and backups to backups.
3. Black swan in terms of load, we are usually underutilized to make up for a bump up in activity. Black swan in terms of risk, we have always been conservative and in any case all the intraday leverage restrictions force all brokers to be conservative today. We anyways have been allocating 10% of our profits every year for one of those black swan events that can potentially cause a large loss to us. I had spoken about this in this post.

Business updates, increased disclosures and improving transparency

We continue to charge no brokerage fees from investors, which means that we depend on intraday equity and F&O traders for revenue. This comes with a few risks.
Powering leveraged trades as a broker comes with a risk; it is almost like running an insurance business. You charge a small fee and allow a customer to trade with leverage, but every once in a while, there will be a black swan event when a group of customers can lose more than their capital, which can become a liability if the customer doesn’t bring in funds. For example, in April 2020, when crude oil prices settled at -$37, a negative value, which no risk management system worldwide had planned. We lost ~₹30 crores that day, and many international brokers lost tens of millions of dollars. Quite a bit of brokerage we had generated from Crude oil since the start of our business was lost that day. There have been many such events on individual scrips, the most recent being GBPINR moving ~4% in a day when margin requirement was ~2%. There is no way around this risk, and we could wake up any day with a large event that moves the entire market or individual scrips by more than 20% lower or higher, leading to liability on the broker if the client defaults. We have been allocating 10% of our profits to a war chest from the start of our business as a contingency to cover for whenever there is a black swan.

[nithin]

@Athul_Ajai

I have read the article on “Trading with other people’s money” posted by Zerodha. I have got a small doubt after reading it. Do I need to register as a company to collect money from family or friends if the collected money is below 10 lakhs. As the amount is small, is it illegal if I trade with the mentioned amount in a single trading account and give the already agreed upon profit percentage to the investors annually and keep the rest with myself ?

Collecting money in any form from anyone to trade the markets is illegal (other than PMS, AIF, MF). Doesn’t matter how much money and doesn’t matter if you are doing this through a company/partnership/or any other structure.