Zerodha co-founder Nithin Kamath announced on Wednesday that the company will cease sharing brokerage revenue as part of its referral program due to a recent NSE circular.
The circular, issued last week, bans brokers from offering brokerage as referral incentives unless the individual is registered as an authorized person with the exchanges. Kamath criticized the circular in a social media post, stating it could negatively impact the business.
In response, Zerodha will end its referral program and settle any outstanding balances. “We will disburse all referral wallet balances exceeding ₹10 (as of July 31, 2024, the last update) and terminate our referral program. However, you will still earn 300 reward points for every account you refer, which can be redeemed for AMC or paid access to partner products such as smallcase, Tickertape, Tijori, MProfit, and Quicko,” Kamath noted.
Kamath assured users that while the brokerage revenue sharing program is ending, the referral rewards program will continue, allowing users to earn reward points redeemable for various services.
The NSE’s decision aims to address concerns about trade inducement by ensuring that only registered entities are involved in referral activities. The circular also prohibits schemes promising fixed returns or unauthorized investment plans.
This measure is part of the NSE’s broader effort to protect investors and ensure compliance with regulatory standards set by SEBI and the exchange, reducing risks associated with unauthorized schemes and ensuring transparency in promotional activities.
