A recent NSE circular disallowed sharing of brokerage income for referrals to prevent trade inducement.
“To comply, we have stopped sharing brokerage income for referrals effective August 25, 2024. We will continue to offer 300 reward points for each referral,” Zerodha said.
Zerodha said that all those referral wallet balances are Rs. Will pay more than 10 and stop the referral program from August 25.
However, clients will continue to receive 300 Reward Points once per account which they can redeem against AMC or pay for other partner products (Smallcase, TickerTap, Treasury, AmProfit and Quico).
Meanwhile, the broker said it represents the exchanges directly and through various forums on why it should continue the referral program.
Earlier, the NSE said that it has come to the notice of the exchange that certain referred persons are not registered as authorized persons of the concerned trading member.
With a view to protect the interest of the investors, the exchange clarified that any person referring a client to a trading member shall be designated as an authorized person (AP) of the trading member after obtaining specific prior approval from the stock exchange.
“It is reiterated that trading members should ensure that their authorized persons are engaged only in permitted activities and do not carry out any business disallowed under SEBI rules including running any schemes of unauthorized collective investment etc.,” an exchange circular noted. is
The logic of the exchange is that while the broker shares a percentage of the brokerage generated as a referral profit to the client, those individuals may induce their referrals to trade, which is not in the best interest of the client.
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