2 min read.Updated: 08 Oct 2020, 04:26 PM IST Written By Anulekha Ray
The Kamath brother started India's first online discount brokerage firm Zerodha in 2010 with a team of five people
With over 22 lakh active users, the platform sees over three million trades every day
Nithin Kamath and Nikhil Kamath, the founders of Zerodha, India's biggest stock brokerage company in terms of volume of trade and of True Beacon, an asset management company (AMC) are the newcomers in the Forbes' list of India's 100 richest 2020. Their net worth is estimated at $1.55 billion.
The Kamath brothers started India's first online discount brokerage firm Zerodha in 2010 with a team of five people. The name Zerodha is a combination of Zero and "Rodha", the Sanskrit word for barrier. The startup used to focus on day traders at the beginning. Since then, the duo has grown massively. With over 22 lakh active users, the platform sees over five million trades every day. "Our disruptive pricing models and in-house technology have made us the biggest stock broker in India in terms of active retail clients," the company said.
Zerodha offers trading in equities, bonds, currencies, commodities and mutual funds. An investor has to spend ₹300 to open an account in Zerodha. The equity delivery investments are free. Securities transaction tax is charged variably for equity delivery, equity intraday, futures and options. It charges a flat fee of ₹20 for every trade, irrespective of its size with no brokerage fee. It has been adding nearly 2 lakh accounts every month.
To empower retail traders and investors, Zerodha runs a number of popular open online educational and community initiatives. The company launched Varsity, a learning module to educate the young investors investing for the first time. It also runs Trading Q&A, an active forum were traders and investors, can discuss stock ideas. Then there is ‘Z Connect’ an interactive blog.
Rainmatter, Zerodha's fintech fund and incubator, has invested in several fintech startups with the goal of growing the Indian capital markets.
In addition to Zerodha, Kamath brothers' founded an investment management firm True Beacon. It is aimed at ultra-high net worth investors and operates on a zero-fee model. The AMC does not charge an account opening fee, redemption fee, maintenance fee. It charges a 10% performance fee on the gains at the end of the financial year from the investor.
On investments during COVID-19
Most discount brokerages have reported a sharp surge in the opening of new demat accounts during COVID-19. At Zerodha, the number of demat accounts opened from January to May surpassed the overall client growth figures of last year. Nikhil Kamath said the average age of these newbie investors has dropped to 30 and the average ticket size to about ₹80,000.
"Retail investors, after a long time, seem to have come into the markets after a crash, buying large-cap bluechip equity amidst the fall in between 8000-9000 Nifty and are seeing substantial returns. This is a big positive for the ecosystem overall and could lead to increased participation from retail in the days to come," Kamath told.