Zerodha to maintain free equity delivery despite new market rules
Zerodha, one of India's top retail brokerage firms, is keeping its equity delivery services free. CEO Nithin Kamath shared this information on social media today. This comes right after new stock market regulations kicked in today. While these changes are shaking things up for options and futures trading, Kamath reassured everyone that "equity delivery will continue to be free at Zerodha."
New regulations increase STT
The latest market rules have hiked the Securities Transaction Tax (STT) for options to 0.1% from the earlier 0.0625%. Meanwhile, transaction charges have dropped to 0.035% from 0.0495%. This means a net cost increase of ₹2,303 per crore of premium on the selling side on NSE, and ₹2,050 per crore on BSE. Kamath pointed out that these changes will hit futures traders hard, since STT is charged on the whole contract value, unlike options where it's only on the premium.
What about futures?
For futures, the STT has climbed to 0.02% from 0.0125%, while transaction charge has decreased to 0.00173% from 0.00183%. This results in a net rise of 0.00735% or ₹735 per crore of futures turnover on the selling side.
Revenue challenges amid regulatory changes
In a recent blog post, Kamath revealed that Zerodha is gearing up for a major revenue hit due to a bunch of upcoming regulatory changes. These changes include SEBI's true-to-label circular, fresh rules for index derivatives, higher STT, new demat account fee structures, and tweaks to referral programs. He also mentioned that Zerodha makes 10% of its revenue from rebates, which will come to an end with SEBI's true-to-label circular.
Financial performance and future outlook
Zerodha saw a whopping 62% jump in profit to ₹4,700 crore for the fiscal year 2023-24. The company's revenue also climbed by 21% to ₹8,320 crore. Kamath hinted that all brokers might need to tweak their pricing models in light of these changes in the coming months. He also expressed optimism that exchanges would pass on the benefits to customers by charging at the lowest slab, which would help ease any potential impact on F&O brokerage.
