While trading in the stock market, it is mandatory for you to pay all other charges and fees including brokerage fees. Meanwhile, many users often take to social media to demand that the brokerage fee be reduced or reduced to zero. But is this possible? Nithin Kamat, CEO and co-founder of Zerodha, the country’s largest online broking firm, took to Twitter on Wednesday to answer all such questions related to brokerage fees.
In a series of tweets, Nitin Kamat said, “Many people ask me whether brokerage rates can be zero like in the US and why is there a monthly brokerage plan, under which users should get unlimited trading facility?”
The CEO of Zerodha said that he does not think so. “Instead of decreasing, brokerage fees may increase further in the future,” he added. Nitin Kamat has also cited many reasons behind this.
He said, “First of all, brokers in the US can also earn in many ways which SEBI does not allow here. There brokers get paid for the order flow as they sell customer orders to HFT firms. Here it is. Can’t. Secondly brokers in US earn through securities leasing. Unlike India there stocks are held in the name of national or brokers and they can earn money by lending to them.”
Also read- Adani Wilmar’s stock rose by 19%, what should be the investment strategy now?
“Brokers in the US get floating income. In India, the amount lying dormant in the demat account of the customers is remitted back to them under settlement at the end of every quarter. But in the US, the funds remain with the brokers,” Kamat said. They not only earn interest on it, but also use it for working capital.
That’s why he believes that brokerage fees in India can never be zero like in the US, he said in a tweet. However, Kamat also said that India is by far the best regulated market in the world in terms of investor protection.
See Nitin Kamat’s tweet-
Many people ask me if brokerage rates can go to zero like in the US, and why not flat monthly brokerage plans with unlimited trades. I don’t think so. I think, if anything, brokerage rates will go up in the future. Here’s why. 1/7
— Nithin Kamath (@Nithin0dha) February 9, 2022
,