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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---
What I've noticed everytime this topic comes up is Zerodha's rather deafening silence. They liked your post - so does that mean complete endorsement? For some reason they resist a total clarification. As others have pointed out, the transaction charges they charge are significantly above others who also use IL&FS. So how about a simple clarification on what these charges are, how they're defined and what the future trajectory may be?

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?
 

Trader J

Well-Known Member
Hi J,

Would you want your broker to be safe or aggressive.. Nifty tanked only 100 points, what if it had done 300 points??

So a client having 1lk in the account would have lost 1.5lks, making the account go 50k in debit.. What if a lot of clients were long?? These are the situations that get brokers in trouble..

The way the Open interest shot up and the very bad liquidity in the markets could have caused havoc, if globally any bad news had come out during the weekend, this would have compounded the RBI news effect....

Yes it is very important for us to have all of you as our clients, but we can't compromise on risk management.. Please do understand that every time we reduce leverage, we take a bigger hit, because the trading volume comes down.. But it always better to be safe than sorry..
OK, if you want to be more safe than I suggest for following.......

1 Make two section of clients, one experienced trader, other one having less experience, and block margin for second catagory.

2 If you think Nifty can go down 300 pts than increase margin 10,000 to 15,000 for intraday.
 

hc9001

Well-Known Member
Re: Intraday Margin on big volatile day.

Increasing intraday margin from 40% to 60% ON BIG VOLATILE DAY would be fine.

Because full magin = 10% of total Value, Normal Intraday magin is 4% of total value. 60% intraday margin means 6% of total value.
Nifty could easily move 4% in worst volatile day. But more than 6% [300+ point] very very rare.

60% intraday margin can SAVE zerodha from 306 point movement when nifty @5100. Now zerodha must consider Risk to Reward (Volume/Brokerage) ratio like a Trader. ;)

Cheers. :clapping:
 

vikrit

Well-Known Member
What I've noticed everytime this topic comes up is Zerodha's rather deafening silence. They liked your post - so does that mean complete endorsement? For some reason they resist a total clarification. As others have pointed out, the transaction charges they charge are significantly above others who also use IL&FS. So how about a simple clarification on what these charges are, how they're defined and what the future trajectory may be?

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?
in commodity also transaction charges very high. ask thru mail. they should clarify these when asked by any customer. if have doubt why, check SEBI and exchanges guidelines.
 
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