How safe is it to trade with Zerodha?

14 / 100

Financials

  • Zerodha have been in business for more than ten years.
  • It is transparently displays on website and the legal documents that clients sign when onboarding that Zerodha offer equity investing for free and charge Rs 20/trade or 0.03% (whichever is lower) for intraday and F&O trades.
  • Zerodha is the the largest retail broker in the world by the number of trades which clearly indicates Zerodha is safe. Zerodha processes over 7 million trades a day.
  • Although  most of these above said trades do not generate revenue for Zerodha, the ones that do, make Zerodha one of the most profitable brokerage firms in India, thanks to its large customer base of more than 13 millions.
  • Zerodha is among the most well-capitalised brokerage firms in the country, only next to the ones operated by large banks. It have its own organically generated capital of around Rs 800 crores.
  • Zerodha have zero debt and zero external borrowings, which again makes Zerodha as the safest broker in India.
  • We all know Margin provided by Zerodha is limited, thus less than 5% of our own capital is lent to customers in any form, there is no credit risk.

Technology

  • In order to increase the safety and become a trustable brand like “TATA” Zerodha have been building technology in-house for seven years and have been reducing the external vendor dependencies that are extremely common in the industry.
  • Zerodha is the only broker that now remains with a single external dependency, still work is going on to remove that single dependency as well.
  • Zerodha have complete control of our technology and data that we house and are able to rapidly make changes to comply with increasingly stringent business, data, and security regulations.
  • Zerodha technology stack is updated continuously to modern standards.
  • Zerodha have been working on building a whole new security/authentication architecture for all of its apps to shield its clients from the rising cases of phishing scams.
  • Zerodha platforms have had cryptographic TOTP 2FA support for a while, and Zerodha is the only broker to offer this.
  • Products of Zerodha do speak for themselves. The trading platforms that Zerodha have developed incorporating good design, simplicity, and usability, are a major reason for the growth in its client base.
  • The scale of Zerodha’s systems is not comparable to that of any other broker in India. During peak market activity, Zerodha broadcast over 16 million price ticks every second to clients who are logged in. In the last financial year, Zerodha processed close to one billion retail trades.
  • The top five (or more) other brokers have been facing prolonged downtimes and glitches every day for more than two months. This is evident from the consistent and persistent user complaints on social media. Some of those brokers have faced multi-day downtimes lasting hours.
  • Zerodha have had three incidents in the recent past.
    • 1) Severe degradation of services on Zerodha platforms for ~20 mins in early March during market close.
    • 2) 20 min intermittent degradation of 20% of the traffic to Zerodha platforms two weeks ago.
    • 3) 7 min intermittent degradation of just about 10% of the traffic to Zerodha platforms earlier this week.