Traders Dismayed At Zerodha’s Systemic Glitch

Zerodha is an Indian financial services company (NSE, BSE, MCX, MCX-SX) that offers broking services to retail and institutional clients. Founded on August 15, 2010, the company’s head office is located in Bangalore and it also has a presence in 9 other cities in India.

The company operates on a discount broking model and claims to be India’s first Discount Brokerage. This business model exempts customers from paying hefty fees to brokers for trading. A flat fee of a maximum of Rs 20 is applied per trade, irrespective of its size, and this helps traders in multiple lots as they are restricted to paying per trade not per lot.

January 2, 2014 turned out to be a day of disappointment for some people trading with Zerodha. As the markets turned volatile around 2 pm when a major sell-off was witnessed, there was a technical glitch in Zerodha’s software which resulted in a difference between the price shown on the screen and price being traded on the exchange. Many users flagged this issue on the forum and on social networking website Twitter. While there is no official confirmation on traders suffering losses resulting out of this malfunction, some users on did claim losses on the forum and on Twitter.

Discomfortingly, for the duration that this problem lasted, the company was not reachable via its phone lines. DSIJ tried to reach Nithin Kamath, Founder and CEO of Zerodha, but our calls went unanswered. (Edited to add: The company's CEO Nithin Kamath did speak with DSIJ later, telling us that this was a simple technical glitch for a period of approximately 15 minutes. During this time, orders were getting executed and traders using the Zerodha platform suffered only notional losses.)

Zerodha is the fastest growing broking house with a client base of 10,000. For any business, especially one as sensitive as broking, having infrastructure with a high degree of sophistication, premium tech support and excellent customer service are paramount. Likewise, learning from mistakes is important in the context of business, and we expect Zerodha to take their lessons from this instance of system failure. In the event of such a problem in the future, traders and investors would be benefited by an SMS or email heads-up and to have a proper system to answer and solve customer queries.