Comment on The race to Zero – Can the Indian brokerage industry survive?
commented on
21 Dec 2019, 02:37 PM
Margin benefit for hedged position is determined by the exchange/SEBI and not us. There is hope that soon it will get reduced from what is currently asked for. But not in our control again.
>> So why cant Zerodha lend that amount to clients when the risk is defined for a hedged position, and charge interest on it? Like a bank? Say 12%.
Assume I need 1 lakh margin for a trade, and if I even hold that position for one day @12%, Zerodha gets 12,000/365 = 33 Rs. which is more than 1.5 times the current brokerage for that order!
And the risk is completely defined, so you have even more control than a bank, which never knows whether their loan will go NPA or not.
Seems to me an ideal business plan. Wonder why brokers in India are not doing this….