Is Zerodha better than Interactive Brokers?

Short Answer

Interactive Brokers & Zeodha are two Brokers from the Discount Broking community but both are quite different from one another in terms of Features and Working. One is an Indian discount Stock Broker whereas the other is a U.S based Discount broker that has its branches in many countries. Let's look at them in depth below.

Detailed Answer

Introduction-

In India, there are a plethora of Stock Brokers offering a variety of products across various asset classes like Equity, commodities, derivatives, etc. Out of all Discount Brokers Zerodha is the largest and the most used Stockbroker In India.

Let’s look at and compare 2 of the Brokers that are currently running operations in India, Zerodha & Interactive brokers. Both are Discount brokers but the major difference is that Zerodha is an Indian company whereas Interactive brokers are a U.S based company that has its presence in India.

1.Zerodha:

Zerodha was India’s first discount broker and was founded in 2010 by Nithin Kamath. Zerodha has more than 33.9 Lakh active clients which constitute about 18.85% of the total clients in NSE. This makes Zerodha the biggest Stockbroker in India in terms of active clients. Zerodha has the membership of NSE (National Stock Exchange), BSE (Bombay Stock Exchange), MCX (Multi Commodity Exchange), NSDL (National Securities Depository Limited), CDSL (Central Depository Services Limited), and the NSE F&O (Futures & Option).

The stock broker lets its clients invest in Equity, commodities, Derivatives, Mutual Funds, IPO’s, Bonds, Government Securities.

2.Interactive Brokers:

Interactive Brokers is a U.S based Stockbroking company that has its presence across various countries in the world India included. It was formed in the year 1978 in New York and scaled to India in 2009. Interactive brokers work on the discount broking model hence the brokerage is very less. The account opening charges are fairly reasonable. It has its membership with only NSE in India.

It has a very limited range of products which is only limited to Equity, Derivatives, and currency.

Zerodha vs. Interactive Brokers - Comparison

Both of the brokers can be compared as they both belong to the Discount Broking space.

  1. Zerodha is in the lead when it comes to features and investment opportunities. While Zerodha provides most of the current investment tools such as Mutual Funds, Bonds, NCDs, etc, Interactive brokers lack in all of them. Whereas Interactive brokers beat Zerodha in the option of investment opportunities abroad, all under one account.
  1. Being a Discount broker Zerodha does not offer any additional analysis reports or tools whereas Interactive brokers have various trading software and research reports which is available for subscription on their platform.
  1. Zerodha does not charge any additional fees while adding or withdrawing funds from the trading account but in the case of Interactive Brokers, one has to deposit money in Dollars hence there is a currency conversion charge when converting Indian Rupees to Dollars. Also, there is a wire transfer charge implemented by the Bank that should be considered.
  1. Zerodha charges Rs 200 for Account Opening and Rs 300 for AMC (Annual Maintenance Charges) whereas Interactive Brokers charge 0 for account opening and 0 Maintenance charges but one has to maintain 100$ in their trading account and the brokerage is Rs200 per month.

Conclusion-

Looking at the features and limitation of both the broker, one can say that both stand strong in their respective places. Zerodha can be considered to be the best candidate when looking to invest only in India in various investment avenues.

On the other hand, Interactive brokers can be the go-to option when looking to diversify your portfolio abroad. Hence to sum it up, Zerodha seems to be a better option of the two in terms of charges and broader investment opportunities. What do you think? Do share your views.

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