What Sebi’s 15% ‘onerous ceiling’ on open curiosity means for dealer development, clients: Zerodha’s Nithin Kamath explains

Zerodha founder and CEO Nithin Kamath stated the 15% open curiosity (OI) cap on the dealer degree locations a tough ceiling on how a lot a broking agency can develop and the tempo of that development. Whereas the restriction limits scale, it in the end advantages shoppers by decreasing focus danger and stopping any single dealer from turning into too dominant.

Kamath additionally referred to as broking a novel enterprise whereas giving an perception into what goes inside it.

“Broking is a novel enterprise as a result of there is a onerous ceiling on how a lot we will develop and the speed at which we will develop. What most individuals do not realise is that SEBI has set a 15% open curiosity (OI) cap on the dealer degree,” Kamath posted on his official X deal with on Tuesday.

“No single dealer can maintain greater than 15% of the overall market OI. This restriction exists to mitigate the danger of focus from any single dealer turning into too massive. Focus is useful for enterprise however in the end detrimental to shoppers,” the tweet stated.

Drawing a parallel with UPI functions, Kamath stated that the Nationwide Funds Company of India (NPCI) has created the same restriction on third-party UPI functions although the measure was by no means applied.

“That is much like the 33% market share restriction that NPCI imposed on third-party UPI apps. That measure was by no means applied as a result of it might’ve meant UPI apps stopping transactions, however in our case, the restrict is relevant,” Kamath stated.
Additionally learn: Zerodha’s late MTF entry nonetheless nets 5% market share however Nithin Kamath flags price blind spot

How Zerodha has benefitted?

Kamath stated that the one manner particular person brokers can develop is that if different brokers additionally develop, and luckily for Zerodha, the general market has grown serving to the agency to take care of its 15% OI market share for the final 5 years.

“For us to develop, the general market should develop, and which means different brokers should additionally do effectively. Though we have now been at almost 15% of OI for the final 5 years, luckily, the general market has grown, and we have benefited,” Kamath stated.

(Disclaimer: The suggestions, ideas, views, and opinions given by the consultants are their very own. These don’t characterize the views of The Financial Occasions.)