Zero brokerage demat accounts make money from everything around the free delivery trade: flat fees on intraday and futures and options orders, interest on the cash clients leave in their accounts, interest on margin funding, depository charges every time you sell shares, annual maintenance fees, and a growing list of other services. “Zero brokerage” is real, but it usually applies only to equity delivery trades (and often direct mutual funds), which is the smallest slice of what an active trading platform earns. Understanding where the money actually comes from helps you see the real cost of using a platform, avoid expensive habits, and spot when a “free” feature has a price attached. The figures below are approximate, drawn from recent public disclosures and rate cards, and they change often, so check your broker’s current charge sheet.
What “Zero Brokerage” Actually Means
- It usually covers equity delivery: buying shares and holding them beyond the trading day.
- It often covers direct mutual funds, which carry no distribution commission.
- It typically doesn’t cover intraday, futures, options, or commodities, where most discount brokers charge a flat fee per order, commonly ₹20 or a small percentage of the trade value, whichever is lower.
- Other charges still apply: securities transaction tax, stamp duty, exchange transaction charges, SEBI fees, GST, and depository charges are payable on trades regardless of the broker, and some of these go to the government and exchanges rather than the broker.
- Zero brokerage isn’t zero cost. You save the commission, but you still pay the rest.
The Revenue Streams Behind “Free”
- Flat fees on intraday and F&O trades
- A flat ₹20 per executed order seems tiny, but active traders can place dozens or hundreds of orders a month, and the fees add up across millions of clients.
- Historically, a very large share of discount brokers’ broking revenue has come from futures and options. One estimate for a leading broker put F&O at roughly 55% of revenue in an earlier year.
- Official studies show that the large majority of individual F&O traders lose money. SEBI’s analysis found that roughly 88% to 93% of individual equity derivatives traders had net losses in recent years, with about 87.7% in FY26. Brokers earn fees whether clients win or lose.
- Interest on client money (float)
- When you add funds to your trading account, some of that money sits idle, and under the rules it can be placed in permitted instruments, with the broker earning interest.
- Interest income has become one of the largest revenue lines. For example, Zerodha’s reported FY26 interest income was about ₹2,269 crore, nearly matching its broking income of about ₹2,738 crore, according to published analysis.
- The exact way client funds and margins can be used is tightly regulated, and the rules have been tightened over the years to protect clients.
- Margin trading facility (MTF) and delayed payment charges
- With MTF, you borrow from the broker to buy shares, paying interest. Rates vary by broker, from single digits to the high teens a year.
- A concrete example: an MTF interest rate of 0.04% a day equals about ₹40 per lakh per day. Borrowing ₹1 lakh for 30 days would cost about ₹1,200, which is roughly 14.6% a year.
- MTF is a growing revenue source. Zerodha, which introduced it in December 2024, reported that MTF and delayed payment charges together generated about ₹448 crore in FY26, with MTF reaching roughly 10% of revenue by one account.
- This stream depends less on how often you trade, and more on how much you borrow.
- Depository (DP) charges on selling shares
- Every time you sell shares from your demat account, a depository charge applies per scrip per day, in addition to the broker’s own fee.
- A typical rate card shows a total in the range of ₹13 to ₹16 per scrip, including GST, regardless of the quantity sold.
- Sell five different stocks in a day and you’d pay around ₹75 in DP charges. Part of this goes to the depository (CDSL or NSDL), and part is the broker’s.
- Annual maintenance charges (AMC)
- Some brokers charge a yearly fee for the demat account, such as ₹300 plus GST, while others waive it or charge nothing.
- Eligible small investors can qualify for a basic services demat account, which has lower or zero charges under SEBI’s framework.
- Pledge, unpledge, and other service charges
- Pledging shares as margin or for a loan typically costs a small fee per request, such as ₹15 to ₹30 plus GST per security.
- Other small charges can apply for services like physical statements or share conversions.
- Account opening fees (at some brokers)
- Many brokers now offer free account opening, though some charge a one-time fee.
Other Ways Platforms Earn
- Asset management and mutual fund businesses: some broking groups run their own asset management companies and earn management fees.
- Subscriptions and data products: premium tools, APIs, and analytics sold to active traders and developers.
- Distribution of financial products: some platforms earn commissions or referral fees from loans, insurance, credit cards, or other third-party products. Others deliberately avoid cross-selling.
- Loans against securities and other lending: interest on credit extended to clients.
- IPO and bond distribution: fees or commissions in some cases.
- Advertising and partnerships: a few platforms earn from partnerships and marketing.
- Investments and ecosystem plays: some groups earn from stakes in related financial businesses.
Each broker’s mix is different, so read how your own provider describes its business.
Why Revenue Mix Matters to You
- Platforms profit from activity. A model based on per-trade fees benefits when clients trade often, which can encourage behaviour that isn’t in your interest, especially in high-risk derivatives.
- Borrowing is a profit centre. MTF interest is a significant cost to you, and easy borrowing can magnify losses.
- Idle cash earns money for the broker, not necessarily for you, so keep only what you need in your trading account.
- Small charges add up. DP fees on frequent sells, pledge fees, and AMC all reduce returns, especially on small portfolios.
- Regulation shapes revenue. When rules change, for example around F&O trading, brokers adjust their business toward other sources such as interest and margin lending.
How to Protect Yourself as a Customer
- Read the full charge sheet before you open an account, including brokerage, DP charges, AMC, MTF interest, pledge fees, and any other charges.
- Compare total cost for your own behaviour. A long-term investor who buys and holds pays very differently from an active trader.
- Avoid unnecessary leverage. Be cautious with MTF and derivatives, and understand the interest and risks before you borrow.
- Don’t let “free” drive you to over-trade. Fewer, well-considered trades usually cost less in total.
- Keep idle cash low in your trading account, and move excess funds to your bank.
- Minimise needless sells of many small positions if DP charges matter to you.
- Look into a basic services demat account if you qualify.
- Ignore nudges, notifications, and gamified features that push you to trade more than you planned.
- Check how the broker makes money on its website or annual disclosures, and favour transparency.
- Keep records of charges in your contract notes and ledger, and verify them.
Frequently Asked Questions
Q1. If brokerage is zero, how does the broker survive?
It earns from flat fees on intraday and F&O orders, interest on client funds and margin lending, depository and maintenance charges, and other services.
Q2. Is zero brokerage really free?
Only the commission is free, since taxes, exchange fees, depository charges, and sometimes annual fees still apply.
Q3. Which charge matters most for long-term investors?
Depository charges on selling and any annual maintenance fee, since delivery brokerage is zero.
Q4. Why do brokers push margin trading?
Margin funding earns interest from customers who borrow, and it’s a growing revenue stream that doesn’t depend on trade frequency.
Q5. How can I find out how my broker earns money?
Read the broker’s charge sheet and public disclosures, and look at its annual financials if it publishes them.
