Leading online brokerage Zerodha said  it will not charge users after the revised exchange transaction charges (ETC) and securities transaction tax (STT) came into effect. The company, however, said this is a substantial change that will have a significant impact on the financials of all brokers.

Zerodha’s Co-founder and CEO Nithin Kamath said equity delivery will continue to be free at Zerodha. “As of now, we are not making any changes to our brokerage”, he added.

Zerodha earns 10 per cent of its revenue from rebates that would cease to exist with SEBI’s 'true-to-label' circular.

For options, STT increases to 0.1 per cent from 0.0625 per cent, and transaction charge decreases to 0.035 per cent from 0.0495 per cent.

This results in the cost of trades seeing a net increase of 0.02303 per cent or Rs 2,303 per crore of premium on the selling side on NSE and of 0.0205 per cent or Rs 2,050 per crore on BSE.

For futures, STT increases to 0.02 per cent from 0.0125 per cent, and transaction charge decreases to 0.00173 per cent from 0.00183 per cent. This results in a net increase of 0.00735 per cent or Rs 735 per crore of futures turnover on the selling side.

Since STT is charged on the entire contract value for futures, whereas in options, it is charged only on the premium, the impact will be much larger for futures traders.

“We earn about 10 per cent of our revenue from these rebates. This could range between 10 per cent and 50 per cent of the revenue for other brokers. For us, this has increased from 3 per cent to 10 per cent in the last four years because of the increase in options turnover”, said Kamath.

“Today, 90 per cent of our revenue from these rebates comes from options trading alone. With the new circular brokers will no longer earn these rebates”, he added.

All brokers may be forced to tweak their pricing models to adjust to the new reality in a few months.

“The hope with this circular is that the exchanges will pass the benefit to customers by charging the lowest slab. So, an increase in F&O brokerage shouldn’t be of any impact”, said Kamath.

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