The fall in the stock market and tighter guidelines by the Securities and Exchange Board of India (Sebi) in the derivatives market has seen the total active client base of brokers fall by 10% from its peak at the end of December. In September-end, the number of active clients stood at 44.35 million, down from 49.49 million in December, according to data from the National Stock Exchange (NSE).
The IPO-bound Growww attributed this fall to seasonal factors in its DRHP, citing a Redseer Report. Trivesh D, COO of Tradejini attributed this fall to a sideways direction of market and a cooling effect after post-Covid activity. “Markets are expanding even if certain products like weekly Bank Nifty are not available and trading in commodities has increased,” he said.
Nithin Kamath, founder and CEO of Zerodha, in a business update at the end of September, said that the risk of regulators questioning the utility of options turnover has now crystallised with the increase in STT on options and the reduction of expiries to two weekly contracts on options.
Along with these, he added, the increase in the BSDA (Basic Services Demat Account) limit, removal of the exchange transaction charges rebate, and a general drop-in market activity, our revenues and profits took a hit last year as they had expected. “The impact of all these changes started hitting us from October 2024, so the numbers don’t fully reflect in the financial year 2024/25,” he said.
He further said, if the regulator stops weekly options completely, Zerodha would be forced to start charging brokerage for equity delivery trades to make the business tenable, as most of its competitors already charge for delivery trades.
Brokerage firms are already seeing a fall in the volumes as well. For example, the F&O contribution in the gross broking revenue of Angel One fell to 46% in the second quarter of FY26 from 81% in the Oct-Dec quarter last fiscal.
As far as fees go, brokerage firms like 5Paisa, Groww, and Upstox charge a Rs 20 brokerage fee across delivery, F&O, and intraday segments. For Angel One it is Rs 30 or 0.3%, the brokerage has further increased it to lower of Rs 20 or 0.1% per trade, with a minimum charge of Rs 5 — up from Rs 2 earlier for delivery segment and for intraday (cash segment) trades, the brokerage will now be the lower of Rs 20 or 0.1% per trade, compared to the previous rate of 0.03%, with a minimum charge of Rs 5.
Discount brokers Groww, Zerodha, Angel One, and Upstox held 63% of the total market share in terms of active clients.
New business lines
Both traditional and discount brokerages are exploring new lines of business. The Redseer report, commissioned by Groww, for its public offer said traditional brokerage houses and banking institutions have accelerated the transformation of their products and services. Simultaneously, many niche domestic players have emerged in the recent past and continue to gain traction. Competitive intensity is expected to continue and current players need to evolve and expand product portfolio and revenue streams for sustained long term growth.
Tradejini is focusing on user-friendly innovative products like Q+ Analysis for ease of bulk order execution basket mode and Next Option, which helps investors to evaluate risk, back test it and then deploy money.
Groww intends to launch a bouquet of wealth products and services, including advisory with a technology-led and relationship manager service model.
“In addition, recognising that a key part of a customer’s wealth journey includes accessing credit and liquidity, we have launched loans against security which are loans secured by a customer’s pledge of stocks or mutual funds on our investment platform,” it said.
Meanwhile Zerodha plans to launch instant loan drawdown for pre-approved pledges by November end, UPI mandate setup for easy loan repayments by November end, and direct mutual fund pledging through CAMS integration this year.
Vineet Agrawal, CFO of Angel One said, the newer businesses, especially the distribution, the wealth and the asset management businesses, between three to five years, should contribute double-digit to our top-line and while in the absolute numbers they will be significant.