Zerodha may end zero brokerage structure for equity delivery trades after Sebi's order: Nithin Kamath

"This circular has a significant impact on brokers, traders, and investors," Kamath said.

Kamath, co-founder and CEO of India's leading broker Zerodha, said stock exchanges charge based on the overall turnover contributed by brokers.

"The difference between what the brokers charge the customer and what the exchange charges the broker at the end of the month is a rebate, which goes to brokers. Such rebates are common across the major markets in the world. These rebates account for about 10% of our revenues and anywhere between 10-50% of other brokers across the industry. With the new circular, this revenue stream goes away," he added.

Stating that Zerodha is one one of the last remaining brokers that offered free , Kamath said that they could do this only because F&O trading revenues were subsiding equity delivery investors.

"With the new circular, we will, in all likelihood, have to let go of the zero brokerage structure and/or increase brokerage for F&O trades. Brokers across the industry will also have to tweak their pricing," he said.

Exchanges often charge a lower fee to brokers if they generate high volumes, contributing to a surge in trading across segments like derivatives.

Asking exchanges to stop this practice is part of a wider set of measures being discussed by the Sebi to curb the frenzy in India's derivative markets.