Zerodha is contemplating charging a brokerage fee for equity delivery trades after the investment tech company witnessed a steep decline in revenue in the financial year ended March 2025 (FY25), as well as the latest June quarter (Q1FY26).
“From 2021, I had been tweeting about the risks to the broking business, but somehow I kept getting surprised on the upside. But starting around October last year, all the risks I was thinking about crystallised. First came the STT (securities transaction tax) increase on options, then the removal of exchange transaction charge rebates, and a reduction in weekly expiries.
“In addition to this, there was a significant decline in market activity. Due to all these factors, our revenues and profits suffered a decline. This year, we are seeing a drop in broking revenues of about ~40%,” Zerodha Co-Founder and Chief Executive Officer (CEO) Nithin Kamath tweeted, as the company turned 15.
Zerodha first waived the brokerage fee for equity delivery in August 2015. Until then, it levied Rs 20 or 0.1% of the order value, whichever was lower. The pivot to a zero-brokerage model was aimed at helping Zerodha reinvent its image from “a broker just for speculation”, and attract new retail investors to the platform.
Why Zerodha Might Want To End Zero Brokerage Model
“The regulatory actions, be it the drop in transaction charges revenue, the increase in STT on F&O (futures and options), the proposal to make futures and options trading tougher, ASBA (Application Supported by Blocked Amount) for trading, the increase in BSDA (Basic Service Demat Account ) limit, etc., will have a significant impact on our revenues and profitability. The time has finally come for business to pivot,” Kamath wrote in a detailed post on Tuesday.
He highlighted that Zerodha’s options-heavy revenue model is under severe stress since the Securities and Exchange Board of India (SEBI) introduced stricter curbs on F&O trading in October 2024.
While Kamath did not disclose exact figures, he shared a graph which depicted that Zerodha’s profit after tax (PAT) fell below the Rs 5,000-crore mark in FY25 as the company’s top line took a significant hit. Furthermore, he said the company witnessed a 40% decline in brokerage revenues in Q1FY26. Interestingly, industry rival Groww only witnessed a 10% decline in revenue in the June quarter, while listed stock broking firm Angel One saw a 20% decline in its revenue during the same period.
Zerodha saw a decline in revenue for the first time in its history in FY25 after SEBI introduced new F&O rules
The Zerodha co-founder attributed the decline in the business to the changing regulatory environment in the F&O segment, which resulted in retail option trading volumes eroding. Here are some developments that have impacted the company’s earnings in the past year:
- Starting October 2024, capital markets regulator SEBI increased the STT on F&O investments…
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