Zerodha's Nithin Kamath Confirms Free Equity Delivery, STT Hike For F&O Traders

Zerodha has ensured its consumers that equities delivery would remain free with no increases in brokerage costs even while the market responds to recent regulatory changes. Following SEBI's true-to-label circular, new fee structures for options and futures trading went into effect on October 1, 2024, with the goal of creating a more transparent and standardized pricing environment for brokers.

Co-founder Nithin Kamath, a Bengaluru-based billionaire, addressed concerns about potential fee hikes on social media platform X, stating, “Equity delivery will continue to be free at Zerodha. As of now, we are not making any changes to our brokerage.” It comes after Kamath cautioned that SEBI's circular might force all stock brokers to reconsider their business strategies.

The circular, which became effective on October 1, had a major impact on how stock exchanges charge brokers. Previously, transaction costs varied depending on the broker's overall monthly turnover, with larger brokers paying lower fees. The new laws impose a similar transaction charge on all brokers, regardless of trading volume.

As part of these changes, the NSE has set specific transaction fees, it will levy Rs 2.97 on each side per lakh of traded value in the cash market, Rs 1.73 per lakh for equity futures, and Rs 35.03 per lakh of premium value for equity options. For Sensex and Bankex options contracts, the transaction fee is revised to Rs 3,250 per crore of premium turnover value.

Also, with these fee revisions, the Securities Transaction Tax (STT) has undergone modifications as per the budget announcement made in July. The transaction price has been lowered to 0.035 per cent, however the STT on options trading has increased from 0.0625 per cent to 0.1 per cent. Kamath claims that this results in a net cost rise of Rs 2,303 per crore for NSE and Rs 2,050 per crore for BSE on the selling side of the premium.

In the futures market, the STT has been raised from 0.0125 per cent to 0.02 per cent, while transaction charges have been slightly reduced to 0.00173 per cent. Kamath explained that this results in a net cost increase of Rs 735 per crore of futures turnover on the selling side. He also noted that futures traders are likely to feel a greater impact, as STT is charged on the entire contract value, while for options, it is levied only on the premium.

Despite the expected shifts in revenue, with Zerodha anticipating a 10 per cent drop owing to the new fee structure, the company remains committed to its primary philosophy of offering affordable trading alternatives to its consumers. Kamath's robust position on continuing free equity delivery demonstrates Zerodha's commitment to helping its clients in the face of industry developments.