Is Zerodha Safe?Is Zerodha reliable? Is online trading safe in india? What happens if Zerodha goes bankrupt? Every time when a brokerage firm is in the spotlight for wrongdoing, similar questions emerge on online forums. In this post, let’s evaluate and determine how safe is zerodha?
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Is Zerodha Safe?
For several reasons, Zerodha is one of India’s most trusted stockbrokers, including open and transparent business processes, the founders’ clear purpose, no serious infractions documented thus far, continued investment in technology, and a zero-debt company from day one.
It is India’s largest brokerage, with over 22 lakh current clients. Zerodha is a member of the BSE, NSE, MCX, and NCDEX, and is registered with SEBI. Through its CDSL membership, it also provides demat account services.
Zerodha has been in the retail stockbroking business for more than a decade (since 2010). Exchanges and SEBI audit them on a regular basis.
Zerodha had committed no serious regulatory infractions as of March 2021, according to the Major Indian regulatory bodies.
About Zerodha
The following are crucial facts about Zerodha that you should be aware of. They are India’s No. 1 stock broker and the country’s first online discount brokerage firm.
On the 15th of August, 2010, they began operations. In respect of clients, retail order volumes, and other factors, they are India’s biggest stock broker.
They have about 26 lakhs active clients as of March 31, 2021. The total number of people employed by Zerodha is estimated to be around 1200. For trading, they offer an in-house built platform called Kite.
Membership
To get an Idea regarding Is Zerodha Safe? we need to check out his membership:
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SEBI Membership
Zerodha is a member of key stock exchanges such as the NSE, BSE, and MCX, and is authorized by SEBI. SEBI Registration number of Zerodha is INZ000031633. All brokerage firms in India that provide trading services must register with SEBI and adhere to a set of rules.
Similarly, stockbrokers must join stock exchanges in order to provide their consumers with access to the exchange systems.
Both SEBI and stock exchanges maintain a close eye on its members and audit their accounts on a regular basis to ensure compliance with the rules.
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Depository Participant Membership
Zerodha is also a Depository Participant (DP) with CDSL, one among India’s two central depositories for demat accounts. This membership entitles it to open CDSL demat accounts for its clients.
Please note that Zerodha does not open or handle demat accounts; instead, it acts as a mediator between consumers and the CDSL.
It’s Depository services SEBI Registration Number is IN-DP-431-2019 & DP ID is 12081600 (Zerodha Securities Pvt. Ltd.)
Financials of Zerodha
Let’s take a look at financial conditions of Zerodha to understand how safe is zerodha?
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Charges
Despite the fact that Zerodha has been in business for 10 years, there is a false notion that it lacks a revenue plan. This is absurd because they clearly state on their website and in the legal agreements that clients sign when they sign up that they offer free equity investing and charge Rs 20 per trade or 0.03 percent (whichever is less) for intraday and F&O trading.
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Number of Trades
By number of trades, they are most likely the biggest and most popular broker. While Charles Schwab (the biggest broker in the United States with $4 trillion in assets under management) recently claimed a record 2+ million deals, they have been processing over 7 million trades each day.
While the majority of these trades do not generate money for them, those that do help them to become one of India’s most lucrative brokerage houses.
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Capital
Their own capital in the business is above Rs 800 crores at a group level, all of which has been earned organically. They are one of the country’s best-capitalized brokerage firms, second only to those run by huge banks.
They have no external borrowings and no debt. There is no credit risk because they lend less than 5% of their own money to consumers in any form.
Technology
Here are the major things which you should know about Technology used in Zerodha to know is zerodha safe:
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Outsourced services
For the past seven years, we’ve been developing technology in-house and minimising their reliance on external vendors, which is extremely common in the sector.
They must be the only broker who still has a single external reliance (Refinitiv for the Order Management System like most other brokers).
Here, too, we’re putting forth a lot of effort to reduce the last remaining aspects of external reliance.
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Standards
They have complete control over the technology and data they store, and they can make adjustments quickly to meet ever-stricter business, data, and security standards. Their technological stack is upgraded on a regular basis to meet current industry requirements.
To protect their customers from phishing scams, they’ve been working on a brand new security/authentication architecture for all of their apps.
They will make an announcement about this as soon as possible. For a long time, their systems have supported cryptographic TOTP 2FA, and they are the only broker to do so.
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Platform & System
Their trading platforms, which incorporate good design, simplicity, and usefulness, are a primary reason for their customer base’s expansion through word-of-mouth. The results are self-evident.
Their systems are unlike those of any other broker in India in terms of scale. During periods of high market activity, they broadcast nearly 16 million price ticks every second to logged-in customers.
They processed about one billion retail trades in the previous fiscal year.
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Technical Glitches
For more than two months, the top five (or more) other brokers have experienced daily downtimes and difficulties. The constant and continuous user complaints on social media bear this out.
Some of these brokers have had multi-day outages that lasted several hours. They’ve had three occurrences in the last few months.
- In early March 2020, during market closing, there was a severe degradation of services on their platforms for about 20 minutes.
- In April 2021, there will be a 20-minute intermittent degradation of 20% of traffic to their services.
- In October 2021, there was a 7-minute intermittent degradation of around 10% of the traffic to their systems.
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Errors
These unpleasant errors, however, are minor in contrast to the problems experienced by other brokers; yet, the reaction is tenfold greater in their case due to the volume of activity on their platforms.
Their platforms are used by over 1 million people at the same time, and their systems handle over a billion requests every day. The next largest broker is likely to have a fraction of this volume.
Many brokerage firms make the claim that their platforms are “100% uptime,” but the reality is that any sophisticated system can develop problems for an unlimited variety of causes.
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Technical issues
It is a misconception of how complex systems work to say that their infrastructure has to be revamped and that they need to “install more servers.” At the scale at which they function, the above-mentioned figures already show.
Any system can experience glitches (In recent months, Google has experienced repeated global outages, and RobinHood, one of the major brokers in the United States, was down for some hours over many days).
They have among the sector’s most current and resilient technological stacks. They’ve lately created a tech blog where they’ll discuss how we’ll do it.
Risk Management
In terms of leverage, they are one of the most conservative brokers in the country. As a result, the company’s operational risk is reduced. For all of their clients, they have a uniform risk management policy.
As a result, the risk management system is lean, and the chances of things going wrong are extremely minimal, especially when compared to industry standard practise, which assigns particular risk criteria to certain high-net-worth clients.
They serve India’s greatest number of retail dealers. They don’t have any institutional or ultra-high-net-worth clients with huge risky investments with them.
Due to their size, all three exchanges, depositories, and SEBI inspect every part of their organisation on a regular basis throughout the year.
No Revenue Target
They don’t have relationship managers, and none of the 1200 people on their team have revenue targets. This eliminates the need for anyone to feel obligated to produce brokerage by persuading clients to trade.
They just introduced Nudge, a new mechanism designed to keep scammy penny stocks and illiquid option contracts out of the hands of unregulated advisors and tipsters.
Nudge also informs clients about safe trading practises they should employ when trading. If there are any others, they are likely to be the first to discourage clients from trading.
Conclusion
Zerodha maintains all of the necessary qualifications to be a safe, dependable, and trustworthy stockbroker in India. The firm is a professional brokerage firm with all of the necessary licences and memberships.
This is all from our side regarding Is Zerodha Safe? Let us know your views about is zerodha reliable? in the comment section.
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Why is Zerodha not good?
There are some disadvantages of using Zerodha. It only covers the Indian Market, no protection for investors and technical errors.
Is Zerodha good for beginners?
Beginner traders will always choose the least expensive broker. In terms of brokerage, Zerodha is the favoured broker among beginners because it charges a flat price of Rs. 20. As a result, Zerodha is regarded as one of the most preferred brokers among newbies.
Is Zerodha a genuine broker?
Zerodha is a cheap broker that charges a flat fee of Rs 20 every deal. Zerodha is as trustworthy and secure as any other Indian broker. They are registered with SEBI, BSE, NSE, MCX, and others, and they are audited on a regular basis.
Is Zerodha legal?
In India, Zerodha is a registered stockbroker. The firm is registered with SEBI, CDSL, BSE, NSE, and MCX, and follows the rules set forth by stock exchange regulators. The corporation hasn't been accused of breaking any laws yet.
how safe is zerodha?
Zerodha is a registered stockbroker & they are registered with SEBI, CDSL, BSE, NSE, and MCX, and follows the rules set forth by stock exchange regulators. The corporation hasn't been accused of breaking any laws yet.
