Zerodha CEO Nithin Kamath, in a recent post on X, said that SEBI's new circular will have a significant impact on brokers, traders, and investors.

Kamath said that the new circular mandates all market infrastructure institutions, like stock exchanges, to be "true to the label" in how they levy charges.

He said that stock exchanges charge brokers a transaction fee based on the total turnover they contribute in a month. The higher the turnover, the lower the transaction fee.

This differential, known as a rebate, is common across major global markets. Essentially, the rebate is the difference between what brokers charge their customers and what the exchange charges the brokers at the month's end.

"These rebates account for about 10% of our revenues and anywhere between 10-50% of other brokers across the industry. With the new circular, this revenue stream goes away," Kamath explained.

"We were one of the last remaining brokers that offered free equity delivery trades. We could do this because F&O trading revenues were subsiding equity delivery investors. With the new circular, we will, in all likelihood, have to let go of the zero brokerage structure and/or increase brokerage for F&O trades," Kamath added.