Zerodha founder and CEO Nithin Kamath has listed the potential impact of SEBI’s new transparent pricing circular on the broking industry. SEBI recently released a circular requiring all market infrastructure institutions, such as stock exchanges, to be “true to the label” when it comes to charging fees.
According to Nithin Kamath, this new regulation significantly affects brokers, traders, and investors alike.Stock exchanges determine transaction fees based on the total turnover generated by brokers. At the end of each month, brokers receive a rebate, which is the difference between what they charge customers and what the exchange charges them. This practice is prevalent in major markets worldwide, Kamath noted in a post on social media platform X (formerly X).
Kamath said that with the new circular, Zerodha will, in all likelihood, have to let go of the zero brokerage structure and/or increase brokerage for F&O trades. Brokers across the industry will also have to tweak their pricing, he said.
Kamath went on to say that for Zerodha, these rebates constitute approximately 10% of the revenue, while for other brokers in the industry, it ranges from 10-50%. The new circular effectively eliminates this revenue stream, he said.

“We were one of the last remaining brokers that offered free equity delivery trades. We could do this because F&O trading revenues were subsiding equity delivery investors,” he said.
Sebi has directed market infrastructure institutions (MIIs), such as stock exchanges, to implement a uniform charging structure for all their members starting from October 1. This move eliminates any discounts based on trading volumes.
Presently, certain MIIs employ a volume-based slab charge structure. Members of these MIIs, such as stock brokers, depository participants, or clearing members, usually collect these charges from their clients daily. The MIIs, however, collect the total charges from the members monthly and provide paybacks to their members based on the volumes they generate.
In a circular released on July 1, Sebi emphasized that MIIs, as public utility institutions, serve as first-level regulators. “MIIs, being public utility institutions, act as first-level regulators and are entrusted with the responsibility of providing equal, unrestricted, transparent and fair access to all market participants.”