More Stories

Informist, Wednesday, Aug 21, 2024

 

--Zerodha CEO: Bar on sharing brokerage on referrals to hurt business

--CONTEXT: NSE has barred brokers from client referral incentives

--Zerodha CEO: 1.2 mln clients have referred at least 1 client to date

--Zerodha CEO: Ending client referrals to comply with NSE directive

 

MUMBAI – The recent circular by the National Stock Exchange reminding brokers to desist from client referral incentives such as sharing of brokerage fee with existing clients will hurt business, Nithin Kamath, founder and chief executive officer, Zerodha Broking, said today in a post on X. In the case of Zerodha, 1.24 mln clients "have referred at least one client to date", Kamath said.

 

On Tuesday, the brokerage had not announced that it was stopping its referral programme henceforth, but all outstanding referral wallet balances as of Jul 31 will be paid out. Zerodha Broking further said on Tuesday that it will continue to give its clients 300 reward points one time for every account they referred which can be redeemed against annual maintenance charges.  More

 

On Aug 14, the NSE had issued a circular reminding its brokers that sharing of brokerage, inducement of trade, and similar incentives, must be in line with the code of conduct prescribed under Securities and Exchange Board of India's stock brokers regulations. The exchange said any person, including existing clients, referring a client to the trading member has to be appointed as its authorised person with prior approval from the exchange.

 

The exchange reiterated that its rules prohibit authorised persons from undertaking certain businesses such as portfolio management or collective investment schemes, and from promising indicative, guaranteed, and fixed returns.

 

"This is another one of those circulars that will hurt the business," Kamath said in his post. On Tuesday, the brokerage said that it will be representing to the exchanges "directly and through various forums on why we should continue the referral program."  End

 

Reported by Rajesh Gajra

Edited by Aditya Sakorkar

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.