‘Time has come for business to pivot’: Zerodha’s Nithin Kamath hints at charging brokerage, may impact investors

In a blog post on the company’s website, Kamath detailed how regulatory changes and market shifts have affected revenues, while outlining Zerodha’s long-term vision.

From 2021, Kamath said he had been tweeting about risks to the brokerage industry but often found himself pleasantly surprised on the upside.

“But starting around October last year, all the risks I was thinking about crystallised,” he wrote, citing the increase in STT on options, removal of exchange transaction charge rebates, reduction in weekly expiries, and a significant decline in market activity.

These factors, he added, led to a ~40% drop in broking revenues in the June quarter compared to the same period last year.

Kamath emphasised that Zerodha has the luxury of thinking long-term, without pressure from external investors, allowing the company to continue prioritising customer interests despite short-term volatility.

“Despite the financial headwinds, the last year was also a good year in a lot of ways. In terms of products, we launched several important features,” he wrote.

He also highlighted ongoing investments via Rainmatter to support Indian founders and startups, and initiatives through the Rainmatter Foundation, including a Rs 100 crore rewilding fund with its first project in Maharashtra.

Possible shift in equity delivery charges

While Kamath’s blog focused on overall performance and long-term strategy, Business Standard reported that he also warned Zerodha may soon start charging brokerage for equity delivery trades if regulatory pressures persist.

According to BS, Kamath said the options business could be at risk due to regulators evaluating whether to stop weekly options completely.

He noted that if such changes occur, charging for delivery trades may become necessary to make the business sustainable, as most competitors already levy such charges.

Kamath stressed that these potential changes are not under his control.

“How much we earn is dependent on market cycles, regulations, and other factors. Those who think they have some of this in control and constantly tweak their businesses and products to chase optimisation end up enshittifying their products,” he told Business Standard.

Impact on users

A large part of Zerodha’s user base consists of Gen Z and Gen X investors, many of whom rely on free equity delivery trades to manage their portfolios cost-effectively.

Introducing brokerage charges could affect trading behaviour, particularly for small retail investors, potentially reducing the number of trades or prompting some to explore alternative platforms.

Analysts note that while Zerodha’s long-term strategy prioritises sustainability, users may need to prepare for higher costs per trade, which could reshape trading patterns in India’s retail brokerage sector.