Explainer: Zerodha ups trading fee, others may follow; discount brokers going Eternal way?

Nithin Kamath-led Zerodha is set to increase its brokerage fee for select intrade-day trades to Rs 40 per orders from April 1, 2026. Market participants see a strong likelihood of similar moves from peers in coming days, following the foot-steps the domestic stock broking major.

However, the revised charge will not apply to all traders. The higher charges apply only to the traders who do not meet the Securities and Exchange Board of India's rule of maintaining at least 50 per cent of collateral in cash or its equivalents on an intraday basis.

Market participants believe that the fee hike in the broking industry was on the cards and Zerodha is the first one to bite the bullet. They believe that potential fee hike will add to the topline of cut-throat competitive broking industry, which has been hit hard by volume drought on the back of feeble market sentiments.

The fee hikes from Zerodha, with expectations of others following the suit, comes after a meaningful fall in F&O volumes, which has dented the business of discount brokers, said Harshal Dasani, Business Head at INVasset PMS. "Broking players are now looking at their own balance sheets as well."

Trading platforms are eying a pivot towards a business model like Eternal and Swiggy but the broking industry is very competitive in nature. However, fee hike will impact new traders, who may subscribe to cheaper platforms, while existing ones trust their existing brokers for safety and securities, with fee hike not impacting them, Dasani notes.

Kranthi Bathini, Director of Equity Strategy at Wealthmills Securities said the convenience has its own cost and discount broking firms have made trading much easier for traders in the last few years amid all the rising competition in the industry.

Besides this, market participants believe that fee hikes are a diktat towards improved profitability, with the majority of the market infra providers hurt by increased securities transaction tax (STT) and weaker volumes. Brokers have invested heavily in technology and customer acquisition and now it's time to reap benefits of that.

Roop Bhootra, Whole-time Director and Anand Rathi Share and Stock Brokers said that the fee hikes by discount brokerages signal a structural shift in the industry—from aggressive customer acquisition to a sharper focus on profitability. Recent pricing actions suggest that brokerages are testing pricing power. He believes that

Both Bhootra and Bathini believe that the key drivers of fees hike have been SEBI's uniform exchange fee directive that ended the practice where brokers pocketed volume-based rebates from exchanges. The removal of this incentive has left little cushion for the broking firms in tough times.

Following a directive from the Securities and Exchange Board of India (SEBI) to stop volume-linked incentives, the National Stock Exchange (NSE) of India discontinued the practice of offering rebates or incentives to brokers based on the trading volume they generate, effective October 1, 2024.

The broking industry is moving into a space where pricing alone doesn’t set you apart. In reality, pricing has stopped being a true differentiator. Technology is something customers naturally expect. While digital-first platforms have made the market accessible to everyone, investors are looking for more than just low-cost execution, said Pulak Kumar Singh, Chief Business Officer at Jainam Broking.

"As more people participate in complex areas like derivatives, the future of broking will be shaped by value-driven models that blend technology with real human understanding. The next phase of growth won’t come from being the cheapest platform, but being the most relevant and dependable partner in an investor’s journey- powered by data-driven intelligence and human touch," he adds.