Discount Brokers Grapple with Revenue Crisis Following SEBI’s F&O Crackdown
A significant revenue slump is hitting India’s major discount brokerage firms—including Zerodha, Angel One, and Groww. This downturn is directly linked to the Securities and Exchange Board of India (SEBI)’s strict new regulations targeting futures and options (F&O) trading. Because the business models of these platforms heavily rely on high-volume F&O transactions, the measures, implemented to curb speculative trading, have severely disrupted their earnings.
Financial Impact Across Leading Firms 📊
Brokerage revenues have noticeably declined across the industry:
- Zerodha, a platform that historically sourced over 90% of its revenue from F&O trading, reported a 40% year-on-year reduction in brokerage income for the first quarter of the fiscal year 2026 (Q1 FY26). Earnings were further constricted by the introduction of higher Securities Transaction Tax (STT) and limitations on weekly options.
- Angel One saw a 25% drop in overall revenue and a sharper 61% decrease in net profit during Q1 FY26. Despite efforts to diversify, the company’s deep reliance on F&O trading made it particularly susceptible to SEBI’s regulatory shifts.
- Groww, which entered the F&O market more recently, still recorded a 17% revenue decline in the same quarter. Its foundational focus on equity investments and mutual funds has cushioned the impact somewhat, but the effect of the crackdown remains pronounced.
Strategic Responses and Business Model Adjustments 🔄
In light of the regulatory headwinds, the discount brokers are actively re-evaluating their core business strategies:
- Zerodha is considering dismantling its zero-brokerage model and may introduce brokerage fees to ensure financial sustainability.
- Angel One plans to minimize the revenue impact from reduced F&O volumes by emphasizing its existing advisory services and full-service broking model. The firm intends to heavily rely on its large network of relationship managers for this transition.
- Groww has finalized the acquisition of Fisdom in a move aimed at bolstering its position in the mutual fund sector, thereby diversifying its overall revenue streams.
Looking ahead, SEBI’s ongoing regulatory scrutiny is expected to keep the pressure on discount brokers. These platforms must adapt by expanding their product offerings and exploring novel revenue models to maintain competitiveness in the evolving financial market.