Zero Brokerage on F&O

Brokerage fees eat into your profits! To solve this problem, many discount brokers offer zero brokerage charges. Sounds like a good deal, right? 

So, in this article, we will break down the concept of zero brokerage and its advantages. We will also explain how different brokers calculate brokerage to help you make smarter, more cost-effective trades. After all, we want to help you keep more of your investment gains. Let's get started!

Table of Contents

1. What are Zero Brokerage Charges?
2. Zero Brokerage on F&O India
3. Brokers Offering Zero Brokerage on Option Trading
4. Zero Brokerage on Intraday

What are Zero Brokerage Charges?

It is quite a popular feature offered by many online discount brokers. Zero brokerage means that you do not have to pay a fee to your broker for executing a buy or sell trade in the stock market. Since brokerage fees are the cost that comes hand-in-hand with trading, zero brokerage means less trading costs. Ultimately, it makes trading more accessible to people with limited capital. 

Discount brokers often offer unlimited trading plans called Zero Brokerage Unlimited Plans. You can trade as much as you want within a specific segment. However, you have to pay a one-time fee or a fixed monthly fee to do so. Everything is included in this fee, so you won't have to pay any extra charges per trade or lot size ( the size or volume of your trade). 

It may be the ideal plan for:

1. Active traders
2. Traders dealing in large trade amounts
3. Traders who prefer cost-efficient trading

However, zero brokerage may nudge people to trade more often because they don't have to worry about extra charges for each transaction.

Zero Brokerage on F&O India

Many Indian brokers offer zero brokerage on option trading, making it attractive for traders who prefer minimal trading costs. Zero brokerage accounts can reduce trading costs significantly, ultimately enhancing profits. However, you should review the overall fee structure, as some platforms may impose other charges that could affect trading expenses.

Impact of Zero Brokerage on Traders:

1. Cost Savings: It reduces the overall cost of trading transactions, making trading and investment more accessible to retail and small investors.
2. Increased Trade Frequency: As traders don't have to worry about additional brokerage costs, they are likely to trade more often and in higher volumes. This way, they take full advantage of market movement, increasing market participation and liquidity.
3. Higher Profit Margins: No brokerage fees mean higher profits. It also allows you to experiment with different approaches without the burden of hefty fees. 
4. Access to Advanced Tools and Resources: Many tools offer free learning resources and advanced trading tools. Additionally, they also offer promotions and incentives so you can take full advantage of the platform's features. This ultimately leads to an enhanced trading experience. 

 

Brokers Offering Zero Brokerage on Option Trading

Don’t pay to trade when you can do it for free! These are some of the brokers that can help you get the most profits out of your trade: 

1. m.Stock
2. Kotak Securities
3. Shoonya

Let us understand the zero brokerage plans offered by them: 

1. m.Stock

It offers zero brokerage charges on futures and options trading, regardless of the size of your trade or the type of options. You can easily open a zero brokerage account and enjoy free brokerage for life on multiple trading segments, including options. However, you have to opt for its Lifetime Zero Brokerage Plan and pay a one-time fee of ₹999 for the same.

Here's how the brokerage charge is calculated in Lifetime Zero Brokerage Plan:

• Trade Quantity: 120
• Price Per Share: ₹855
• Order Type: Buy
• Exchange: BSE
• Brokerage Applicable: ₹0.00 
• Other Charges:
  • STT (Securities Transaction Tax): ₹0.00
  • Exchange Charges: ₹0.00
  • GST: ₹0.00
  • SEBI Charges (a small regulatory fee): ₹0.05
  • Stamp Duty Charges: ₹3.08
• Total Tax and Charges: ₹3.13

Keep in mind that a zero brokerage fee does not mean you are exempt from other trading charges. You still have to pay minimal government-related charges such as SEBI charges and stamp duty. 
So, for this example, the Net Debit is ₹1,02,603.13, which includes the trade amount and all other applicable taxes and charges.  

2. Kotak Securities

It charges zero brokerage fee under the Trade Free Youth Plan. It is designed to help active traders minimise trading costs. 

Here's how the brokerage charge is calculated in the Trade Free Youth Plan:

• Trade Quantity: 250
• Price Per Share: ₹1,200
• Order Type: Buy
• Exchange: BSE
• Turnover: ₹3,00,000 (the total value of shares bought)
• Brokerage Applicable: ₹0.00
• Other Charges:
  • STT: ₹0.00
  • Exchange Charges: ₹0.00
  • GST: ₹0.00 
  • SEBI Charges: ₹0.15 
• Stamp Duty Charges: ₹9.00 
• Total Charges: ₹9.15 (SEBI Charges + Stamp Duty Charges)
• Net Debit: ₹3,00,009.15 (Turnover + Total Charges)

You need to pay mandatory government-related charges such as SEBI charges and stamp duty. 

3. Shoonya

It is a commission-free trading platform launched by Finvasia. You can trade in multiple securities, including equity, commodities, currencies, futures, and options, at zero brokerage fees. 

Let us understand how brokerage charge is calculated under its zero brokerage trading policy:

• Trade Quantity: 300
• Price Per Share: ₹1,500
• Order Type: Buy
• Exchange: BSE
• Turnover: ₹4,50,000 ( Trade Quantity * Price Per Share)
• Brokerage Applicable: ₹0.00
• Other Charges:
  • STT: ₹0.00
  • Exchange Charges: ₹0.00
  • GST: ₹0.00 
  • SEBI Charges: ₹0.23 
  • Stamp Duty Charges: ₹13.50 
• Total Charges: ₹13.73 (SEBI Charges + Stamp Duty Charges)
• Net Debit: ₹4,50,013.73 (Turnover + Total Charges)

Total applicable charges include mandatory regulatory fees. 

Zero Brokerage on Intraday Trading

Let us understand the zero brokerage plans offered by some brokers for intraday trading:

1. m.Stock

You have to pay a one-time account set-up fee, and then you can enjoy zero brokerage on intraday trading across all segments, including equity delivery and futures & options.

Here is how brokerage is calculated in the Lifetime Zero Brokerage Plan:

• Trade Quantity: 450
• Price Per Share: ₹1,800
• Order Type: Buy
• Exchange: BSE
• Turnover: ₹8,10,000 ( Trade Quantity * Price Per Share)
• Brokerage Applicable: ₹0.00
• Regulatory Charges:
  • Exchange Charges: ₹24.30
  • GST: ₹4.37 
  • SEBI Charges: ₹0.41 
  • Stamp Duty: ₹24.30 
• Total Charges: ₹53.38 (SEBI Charges + Stamp Duty Charges)
• Net Debit: ₹8,10,053.38 (Turnover + Total Charges)

Aside from the mandatory regulatory charges, brokerage on trades is zero.

2. Kotak Securities

Under its Trade Free Youth Plan, Kotak Securities offers zero brokerage on intraday trades across various segments, including cash, futures, options, and commodities. However, you may have to pay a nominal fee for delivery trades.

Here is how brokerage is calculated in the Trade Free Youth Plan:

• Trade Quantity: 300
• Price Per Share: ₹1,500
• Order Type: Buy
• Exchange: BSE
• Turnover: ₹4,50,000 ( Trade Quantity * Price Per Share)
• Intraday Brokerage Rate: Zero 
• Brokerage Applicable: ₹0.00
• Regulatory Charges:
  • STT: ₹0.00
  • Exchange Charges: ₹13.50
  • GST: ₹2.43 
  • SEBI Charges: ₹0.23 
  • Stamp Duty: ₹13.50 
• Total Charges: ₹29.66 (SEBI Charges + Stamp Duty Charges)
• Net Debit: ₹4,50,029.66 (Turnover + Total Charges)

3. Shoonya

It offers zero brokerage on intraday trading and delivery trades. Effectively minimising trading costs. 

Here is how brokerage is calculated:

• Trade Quantity: 350
• Price Per Share: ₹1,200
• Order Type: Buy
• Exchange: BSE
• Turnover: ₹4,20,000 ( Trade Quantity * Price Per Share)
• Intraday Brokerage Rate: Zero 
• Brokerage Applicable: ₹0.00
• Regulatory Charges:
  • STT: ₹0.00
  • Exchange Charges: ₹12.60
  • GST: ₹2.27 
  • SEBI Charges: ₹0.21
  • Stamp Duty: ₹12.60 
• Total Charges: ₹27.68 (SEBI Charges + Stamp Duty Charges)
• Net Debit: ₹4,20,027.68 (Turnover + Total Charges)

Conclusion

Now, you know how traders benefit from zero brokerage plans. It reduces the overall cost of trading, encouraging more people to enter the stock market world. 

It seems like a good option for saving costs on trading. However, the recent directive from the Securities and Exchange Board of India (SEBI) may be the end of zero brokerage, starting 1 October 2024. It requires brokers to implement a uniform fee structure for transactions, effectively abolishing the concept of zero brokerage rate especially in the Futures & Options (F&O) trading segment.

Frequently Asked Questions

1. How to get zero brokerage on F&O?

To get zero brokerage on F&O trades in India, you can choose from various discount brokers that offer this service. Here are some popular options:  

Discount Brokers:

• Zerodha: While Zerodha doesn't offer strictly zero brokerage, they have a flat fee structure for F&O trades, which can be significantly lower than traditional brokers.
• Upstox: Similar to Zerodha, Upstox offers flat fee plans for F&O trades, making it a cost-effective option.  
• 5paisa: 5paisa offers various plans, including zero brokerage plans for F&O trades, making it a popular choice among budget-conscious traders.
• Finvasia: Finvasia's platform, Shoonya, is known for its zero brokerage model, covering all segments, including F&O. (Prices may change from 16 December 2024)

2. Which broker offers zero brokerage for options trading?

As of now, there are a few brokers that offer zero brokerage for options trading:

1. m.Stock: This broker offers a lifetime zero brokerage account for a one-time fee. This includes zero brokerage on options trading.  
2. Wisdom Capital: This broker also offers a lifetime zero brokerage account for a one-time fee, covering all types of trades, including options.
3. Finvasia's Shoonya: This platform offers zero brokerage on all types of trades, including options.  

It's important to note that while these brokers offer zero brokerage, there might be other charges like exchange transaction charges, GST, and stamp duty.

Before choosing a broker, consider factors like the trading platform's user interface, customer support, research tools, and any additional fees or charges.

3. Which broker has the lowest charges for F&O?

Zerodha is widely considered to have the lowest brokerage charges for F&O trading, with a flat fee of ₹20 per executed order.

Here's a breakdown of their F&O charges:

• Futures: 0.03% or ₹20/executed order (whichever is lower)  
• Options: Flat ₹20 per executed order  

It's important to note that while Zerodha has low brokerage fees, other charges like taxes, transaction fees, and stamp duty will still apply. You can use their brokerage calculator to get a better idea of the total cost of trading.  

Here are some other brokers with low F&O charges:

• Upstox: ₹20 per order for all F&O trades
• 5Paisa: ₹20 per order for all F&O trades

It's important to compare the total cost of trading, including all fees and charges, before choosing a broker.