A financial institution that facilitates the trade of securities between the buyer and seller is a brokerage firm or brokers. A full service stockbroker who carries out stock trading has the additional responsibility of doing research and providing recommendations to their clientele (investors or traders).
Full service stockbroker will charge a high premium for their services. Now, everyone can have access to the stock market, thanks to discount brokers. A discount broker or an online broker is a firm that performs the trade for its clients (investors or traders) charging minimally, but does not provide financial advice.
Discount brokers offer their clients the convenience of performing trades via automated, computerized trading systems. There are many discount options provided by these firms as there is heavy competition. All brokerage firms, including discount brokerage and full-service discount brokerage are regulated in the same way and are licensed by each country’s financial regulatory authority.
Zerodha is on the top of the leading list of discount brokers in India due to its large trading volume, number of customers and growth. The name Zerodha is derived from the fusion of the English word Zero and the Sanskrit word Rodha meaning barrier. It was founded in August 2010 by Nitin Kamath, a professional trader for over a decade. He wanted to solve the many problems faced by traders and investors in India and came up with this brokerage that soon changed the landscape of Indian broking.
The headquarters of Zerodha is in Bangalore and its other franchise offices are in the major cities such as Hyderabad (Andhra Pradesh), Pune (Maharashtra), Ahmadabad (Gujarat), Chennai (Tamil Nadu), Vijayawada (Andhra Pradesh), Hubli (Karnataka), Salem (Tamil Nadu), Coimbatore (Tamil Nadu), Kanyakumari (Tamil Nadu) and Kochi (Kerala). Among the innumerable discount brokers in the nation, Zerodha is the firm that went online first. Anyone who would like to open an account online can walk into these franchise offices and get the services needed. The firm allows the investor to trade in share markets such as NSE, BSE, MCX-SX and MCX. Zerodha claims to have a whopping turnover to the tune of Rs. 7000 Crore which accounts for 2% of NSE total turnover.
Zerodha allows their clients to buy and sell stocks, futures and options such as Equity, Currency and Commodity. The electronic trading platforms are provided free of cost to the clients. The trading platforms provided by Zerodha are:
The share trading platform has special features such as Cover Orders, Bracket Orders and Trailing Stop Loss incorporated.
Given below are some of the salient technology solutions and support initiatives they provide to their clients:
Account forms can be filled online and sent to the headquarters at Bangalore. The documents required to open an account in Zerodha include:
The forms are filled and signed along with Rs. 350, a fee for opening the account, has to couriered to the head office at Bangalore. A period of 2 to 3 business days is generally taken for processing and creation of the trading account. Zerodha intimates their customers about successful creation of trading account through email. It also provides the trader with the username and password to access the trading account online.
Zerodha partners with IL&FS to provide Demat services to their customers. Traders have to send their Demat account opening form along with the Trading form to the Zerodha office. The fee of Rs.750 (Rs.350 – first year charge + Rs. 400 – account opening charge) is charged to the traders. Delivery based traders need a DEMAT account whilst F&O traders don’t need one.
Maximum brokerage that the trader can expect will be at most Rs. 20 per trade.
Traders when they use the ‘Call and Trade’ facility, need to take an extra cost of Rs.20 per call. Contract hard copies cost Rs.20 with extra courier charges whereas digital contract notes are sent free of cost through email. For delivery based equity selling, DP charges are Rs. 8 per transaction. Standard NSE charges, transaction charges and statutory levies are charged.
Normally, discount brokers keep brokerage low but hike their transaction charges. Zerodha stands out in that they charge the lowest for the transactions besides keeping low brokerage rates.
Traders can request a payout through the Zerodha Backoffice. The withdrawal request will be processed by
transfer. Fund withdrawals are totally free of cost. Traders cannot withdraw funds through nowonline.in.
As of May 2015, this brokerage structure has had 50,000 accounts opened. It sure is making waves and has become the leading discount broker in the Indian share market.
Zerodha definitely happens to be a great discount broker with over 60,000 customers as of now.
This article is about Zerodha Review. Also see Top 10 Discount Stock Brokers in India