What are clearing charges, and is there any at Zerodha?
Clearing charge is paid by a trader to settle his/her trade through a clearing agency. The clearing process is essentially a back-end process that includes determining a broker’s fund and securities obligation and then settling them with exchanges through the clearing mechanism.
The clearing process ensures an easy settlement of trades with the broking houses and the exchanges.
A broker has a choice of either self-clearing the trades or assigns the task of clearing to a professional clearing member (PCM). Note that there is no clearing charge for equity delivery trades as every broker has to self-clear them.
Zero clearing charges at Zerodha
Since Zerodha has opted to be a self-clearing member, effective from March 2019, all trades placed at Zerodha is self cleared. Hence Zerodha does not levy any clearing charges to its customers.
If you trade with other brokers which require a third party clearing member to clear the trades, you will incur the cost of clearing in your transactions. Charges vary between Rs.200/- to Rs.2000/- for every Crore of transaction.
To put this in perspective, imagine on an intraday basis, you buy and sell the Nifty option at Rs.100 (premium), 10 times during the session. The premium turnover, in this case, is Rs.15 Lakh.
The clearing charges with other brokers can vary between Rs.30 to Rs.300/-.
For the same trade, the charges will be zero at Zerodha.
An illustrative table for easy comparison of clearing charges across various market segments.:
Note: You may not find clearing charges under a separate head in the contract note of other brokers because even though a broker is required to show the clearing and exchange transaction charges separately, several brokers continue to show it as combined.