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
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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.