My guess is this charge is from IL&FS to Zerodha. Zerodha is very similar to virgin mobile in India. In case of virgin mobile backbone is TATA Indicom. I think Zerodha's backbone is IL&FS. IL&FS sold it's brokerage business to HSBC in 2008 but continued depository business. I think IL&FS offers model where you can be frontend and backbone will be provided by IL& FS. The backbone may include providing margins etc. I don't think Zerodha making anything out of transaction charges, it goes to IL&FS. As broker you need to maintain huge margins for liquidity for Futures terminals. The used and unused margins will cost some interest for sure. I think Zerodha or any discount broker's core business is not brokerage. I think core business is to run prop. desk and save brokerage (you being broker) and then recover operation cost of running prop desk from brokerage business profits. I am sure they make good profits in prop desk but brokerage business may be helping to run prop desk at very low cost or free.
------Note: This is pure speculation from my side, I may be wrong---
------Note: This is pure speculation from my side, I may be wrong---
For a business that prides itself on transparency, I find the lack of clarifications from Zerodha themselves quite peculiar. Whether they make significant sums on their prop desk or not, I do not know and frankly don't much care (as long as they aren't front loading trades or anything dubious). But, if they tell me my brokerage is 20 rupees and it turns out its 20 + x percent, that would be extremely dishonest. On the facts as they exist it's hard to definitively say that's not what they're doing, because they refuse to clarify what the charges are & what the criteria for those charges is. I suspect it doesn't matter quite as much to options traders, but as someone who trades reasonable volumes primarily in the futures segment, I'm pretty put off by these charges + the constantly broken software.
So again, clarifications, Zerodha?