'Another Circular That Will Hurt The Business': Nithin Kamath’s Zerodha To Halt Brokerage Referrals After NSE Circular

Nithin Kamath, co-founder of Zerodha, on the social media platform X, formerly Twitter responded to a recent directive from the National Stock Exchange (NSE).

Taking to X, Kamath wrote, "NSE issued a circular last week stopping brokers from sharing any brokerage as a referral incentive unless that person is registered as an authorized person with the exchanges. This is another one of those circulars that will hurt the business. 😬"

The NSE issued a circular last week that shakes up how brokers can handle referral incentives. The new rule prohibits brokers from sharing any brokerage as a referral incentive unless the individual referring is officially registered as an authorised person with the exchanges.

"So, we are stopping our referral programme and making one-time payouts for whatever is due. But we will continue to give out reward points every time you refer a customer to us. These points can be used to pay AMC or access some of our partner products, like @Tijori1@smallcaseHQ, etc.," he added.

"By the way, 12.4 lakhs of our customers have referred at least one client to date," he added further.

Netizens Reaction

"Very few like u implement these in spirit There r few brokers who resort to innovative practices like payouts happening from a different entity to influencers and those who directly or indirectly source business," an X user responded to Kamath's post.

Another user added, "Change is never easy, but I love how you’re turning this around with the reward points system. It’s cool that there’s still value in referring friends, even with the new NSE guidelines. Let’s keep growing the community!"