This middle-class 20-something from Bangalore aims to revolutionise the brokerage industry.

Nithin Kamath, Founder and CEO of Zerodha, which he started in 2009, when markets all over the world were taking a beating, wants to make trading more accessible and herald a new form of broking.

Flat fee

“Our customers are not burdened with any broking charges on trades and transactions and we charge a flat fee of ₹20 per trade, irrespective of the size of the trade,” says Kamath. This model, called discount brokerage, first caught on in developed markets.

Kamath, who traded his first stock at the age of 17 and made money on a penny stock, sees an opportunity in a country where less than one per cent of the population dabbles in the stock market. “In developed markets, around 18 per cent of people invest in stock markets and even if we get half that number in India, we are looking at decent growth,” he says.

Zerodha, an online stock trading company, has around 27,000 customers from Maharashtra, NCR and Southern India, and handles an average of ₹5,000 crore every day, or 1 per cent of the NSE’s average daily turnover.

“If you look at our business, we have done fairly well and expect to close this fiscal at ₹40 crore with 50 per cent margins,” he says, adding that the downturn was a good time to start a business.

The model centres on using technology at the back end to power business. Zerodha does not have real estate expenses and low employee overheads. It has 100 employees.

“If you look at what we are attempting to do, it goes beyond price,” says Kamath, adding that by using technology in the form of algorithms, he can give services to users — services that have not been offered by brokerages except to high net-worth individuals.

New tech

“We have developed a WhatsApp-like app through which an investor can see successes or failures of other investors,” says Kamath. He is also working on a web-based platform that can stream quotes behind corporate firewalls and run on tablets and mobiles.

(This article was published on March 10, 2014)
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