How safe is Zerodha? – I have answered this many times, but it keeps coming up. With a general concern on the health of financial services firms after the recent stock market meltdown, I thought maybe it prudent to update you on why you should not be concerned about your relationship with us.
- We are a zero-debt financial services company. There is no borrowing of any kind.
- There is no credit risk, less than 5% of our own capital is lent to customers in any form.
- Our own funds in the business are greater than 25% of all client funds put together.
- Our ratio of ‘complaints to active clients’ is among the least on the exchange.
- We are profitable as a business and have enough reserves to sustain, even if there was an extended downturn in the economy.
- We haven’t spent any money on marketing and advertising. The month of March was our largest till date in terms of new client account opening, thanks to our million-plus happy customers who help us spread the word.
COVID-19 and our operations
We have been working from home since March 12th, much before the official lockdown was announced by our honorable Prime Minister.
The operations have been running smoothly and we are in a position to extend this if required.
Our support SLAs have been revised indefinitely to 72 hours per ticket instead of the usual 24 hours.
This is the worst-case scenario and we will strive to answer your queries as quickly as possible. The SLAs will be restored once the larger COVID-19 situation is resolved.
Most queries that we receive are already answered on our Support Portal, do try searching for the answer before creating a ticket.
The equity intraday and F&O pricing are being revised from 0.01% or Rs: 20 (whichever is lower) to 0.03% or Rs: 20 (whichever is lower). This does not change the flat pricing rate of a maximum of Rs: 20 per order and equity deliveries continue to remain free. See the revised brokerage calculator.
For all non-POA customers, sell orders that result in the debit of shares from the Demat account (CNC SELL), will now have to be confirmed with the Kite 2-Factor PIN when placing orders. This is in accordance with the instructions we’ve received from regulators. Read more here.
We’ve amended our terms and conditions to incorporate 2-Factor PIN and biometric authentication mechanisms. Refer to the “Security precaution and password” section.
There is a pricing update. We are changing pricing from Rs 20 or 0.01% whichever is lower to Rs 20 or 0.03% whichever is lower.
All F&O contracts are over Rs 2lks in value. So brokerage will always be Rs 20 itself. So the pricing remains the same, nothing changes.
Equity delivery continues to remain free.
- When trading intraday equity, we have a lot of trades which are very small in value.
- There is a cost in executing each trade, which we are not able to recover from low-value trades.
- For example, at 0.01% a Rs 5000 intraday trade generates a brokerage of Rs 0.50. Unlike equity delivery, intraday equity trades are done using leverage, which means these trades also bring risk along with it.
- With the new 0.03%, the same trade will have a brokerage of Rs 1.5. But all the high-value trades will anyways get the benefit of a maximum of Rs 20/trade.
- For most of our clients, the reference point anyways is Rs 20, not many know that they get the benefit of 0.01% or Rs 20 whichever is lower.
How does this compare with the competition?
Upstox charges Rs 20 or 0.05% in normal, they charge Rs 30 or 0.1% for their pro plan where they allow higher leverage. At 0.03% we are till half of their normal and 1/3rd of their pro plan.
5paisa charge Rs 20 or 2.5%. This is actually quite crazy. a Rs 5000 trade will cost Rs 20 with them. Actually, even a Rs 1000 trade will cost Rs 20 with them.