Zerodha’s founder Nithin Kamath explains that a 15% open‑interest (OI) limit set by SEBI stops any single broker from becoming too dominant, which can benefit everyday traders.
What is the 15% open‑interest cap?
Open interest is the total number of contracts that are still active in the market. SEBI, India’s securities regulator, has said that no broker can hold more than 15% of this total across the whole market.
Why SEBI introduced the limit
The rule is meant to lower concentration risk – the danger that one large broker could sway the market or cause problems for investors if it faces trouble. By keeping each broker’s share below 15%, the market stays more balanced.
How the cap affects Zerodha
Because the cap applies to every broker, Zerodha can’t grow beyond that 15% slice of OI. Kamath points out that the only way for Zerodha to increase its business is if the overall market expands, which also lifts other brokers. Over the past five years, the market has grown, allowing Zerodha to stay close to the 15% mark while still adding volume.
What this means for investors
- More competition among brokers, which can lead to better prices and services.
- Reduced risk of a single broker’s failure impacting many traders.
- Steady market growth benefits all participants, including Zerodha’s customers.
In short, the cap may slow down any one broker’s rapid expansion, but it helps keep the trading environment healthy for everyone.
Remember, this is perspective, not prediction. Do your own research before making any investment decisions.