A recent NSE circular has prohibited sharing of brokerage revenue on introductions to prevent inducement of trades.
“In accordance with this, we have stopped sharing brokerage revenue with referrers with effect from August 25, 2024. We will continue to award 300 points per referrer,” Zerodha said.
Zerodha has announced that it will pay out all referral wallet balances above Rs 10 lakh and will discontinue its referral program from August 25.
However, clients will continue to receive 300 points once for each referred account which can be redeemed for paid access to AMC or other partner products (smallcase, Tickertape, Tijori, MProfit, Quicko). Meanwhile, the broker said it is representing the exchange both directly and through various forums on the reasons for continuing the referral program. Earlier, NSE said it had been informed by the exchange that certain introducers have not been registered as authorized persons for the respective trading members. With a view to protecting investors’ interest, the exchange clarified that all persons who refer clients to trading members will be appointed as authorized persons (APs) of the trading members after obtaining certain prior approval from the stock exchange.
“Trading members reiterate that they must ensure that their authorised persons are engaged only in permitted activities and are not engaged in any business prohibited by the Securities and Exchange Commission regulations, including operating unauthorised collective investment schemes,” the exchange’s circular noted.
The exchange’s reasoning is that if brokers share a portion of the commission they earn as a referral reward to their customers, it could encourage individuals to entice their introducers into trading, which is not in the best interest of their customers.
