Zerodha Brokers pioneered the Discount broking space in India and still continues to be one of the top investor preferences. The word Zerodha or 'Zero' 'dha' meaning Zero cost or free of charge transactions. It was the first discount broker to offer the no-brokerage policy to encourage more and more people to try their hand at trading. It offers trading in multiple securities. So, let's dig the commodity trading section of Zerodha and what plans it offers. But before getting into it let's revise what commodity trading actually is.
What is a commodity? Generally, it is any goods bought with a monetary value like grins, oil, gas, etc. however In the financial world. It is an asset in the form of exchangeable securities within the stock market. The prices of the commodities fluctuate in the market but are less volatile than equity securities. They are used as a tool to diversify one's portfolio and protect the funds in case of a bear market.
Some common commodities that are traded in bulk every day in the exchanges are Metals including Gold, silver, platinum and copper, Energy-based commodities like Crude oil, natural gas, gasoline, etc, livestock commodities and Agricultural such as wheat, cocoa, cotton, and sugar.
Zerodha Trading Platforms offer commodity trade in Metals such as Gold, Silver, Copper, and Zinc in addition to one energy commodity, Crude Oil. It facilitates trading in commodities through the Multi Commodity Exchange of India and if often referred to as MCX options Trading.
You can use all the available trading platforms for commodity trading. However, it is ardent for you to go and register on Zerodha's lightweight website portal first or logging into your Zerodha Kite account, before beginning commodity trade. This step is compulsory for all traders to carry out commodity trading with this discount broker.
There is no preposition for market orders on the Zerodha Trading site and thus no leverage is given. Orders of only \Limit\ and \NRML\ can be placed with the MCX exchange. This means that no 'bracket' orders can be placed, only 'cover' orders with an advanced segment are facilitated by this stock broker. To place an exit order, you have to do so on the market or limit the price.
When trading in commodities, a legal agreement is made between the broker and trader stating all the relevant details of the trade including prices, order type, exchange type, and expiry date. To put it in simple terms, it means, that after the set expiry date you cannot trade in that commodity until a renewable is done. If the expiry date happens to be a national holiday, then it pre-pones to a day earlier. Thus you need to keep in check the expiry date of the commodities you're trading in.
For this purpose, all the expiry dates are listed on the company's bulletin and are also notified to their customers. In case you miss the expiry date you can either opt for a cash settlement that means the trade of the particular commodity on the given market price, or the physical delivery settlement wherein the commodities you own are delivered to you from a company warehouse.
You can't have physical delivery settlement of commodities at Zerodha, so that's an important point to keep in mind.
Can you do commodity trading with Zerodha Kite? A very common question! Well, the answer to it is YES! If you are a Zerodha client and have activated MCX in your account, you can do commodity trading with Kite.
Now, if you already have a Zerodha account, all you have to do to start trading in Zerodha commodities is to enable the MCX option from Zerodha Kite. In case of a new account you can visit their website, fill up the open account form and an executive will get in touch with you. Note that across all Zerodha platforms, the login credentials of an investor remain the same.
Specific trading time is allotted to trading commodities in Zerodha other than the equity segment, that is, From 9 am to 11 pm allowing a range of up to 14 hours to analyze, monitor, and trade in commodities. The trading form is easily accessible on the company website.
|Charge||Commodity Futures||Commodity Options|
|Brokerage||Flat ₹20 or 0.03% (whichever is lower)\t||Flat ₹20 or 0.03% (whichever is lower)\t|
|Securities Transaction Tax (STT)||0.01% on sell side (Non-Agri)\t||0.05% on sell side|
|Transaction / Turnover Charges||Group A: Exchange txn charge: 0.0026% Group B: Exchange txn charge: Pepper - 0.00005%, Castorseed - 0.0005%, Rbdpmolein - 0.001%\t||₹0|
|Goods and Services Tax (GST)||18% on (Brokerage + Transaction Charge)||18% on (Brokerage + Transaction Charge)|
|SEBI Charges||0.00005% (₹5/Crore)||0.00005% (₹5/Crore)|
|Stamp Charges||State wise||State wise|