Zerodha co-founder and CEO Nithin Kamath has cautioned that a major overhaul of India's equity market structure, set to take effect on August 3, could erode brokerage revenues by 1% to 5%.
The change introduces a Closing Auction Session designed to improve end-of-day pricing efficiency, but Kamath argues it may inadvertently confuse retail investors and reduce trading volumes during the final minutes of the session.
The structural shift moves away from continuous trading at the close to a staggered auction mechanism.
While regulators intend to minimize volatility and improve price discovery, industry leaders like Kamath suggest the transition period could see a dip in order flow as investors adjust to the new mechanics.
For discount brokers heavily reliant on high-volume retail activity, even a modest decline in daily trades translates directly to lower fee income.
This development adds another layer of complexity for Indian market participants already navigating a volatile global backdrop.