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Zerodha's Nithin Kamath suggests less trading for retail investors to boost profitability.
Summary
Zerodha co-founder Nithin Kamath advocates for less frequent trading by retail investors to improve profitability. He highlights Zerodha's business model, which discourages high-volume trading and prioritizes long-term investor retention over brokerage revenue.
Key Points
- Nithin Kamath, co-founder of Zerodha, discussed the impact of trading frequency on retail investor profitability.
- Zerodha's model focuses on discouraging frequent trades.
- The company's brokerage revenue is significantly lower compared to its peers due to this approach.
- Zerodha avoids nudges that push trading volumes and does not incentivize employees based on revenue.
- The strategy aims to promote thoughtful participation and long-term investor retention.
Full Article
Nithin Kamath argued that increased trading activity reduces profitability for retail investors. He highlighted Zerodha’s model of discouraging frequent trades, resulting in significantly lower brokerage revenue compared to peers. By avoiding nudges that push volumes and not incentivising employees on revenue, Zerodha aims to promote thoughtful participation and long-term investor retention.
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