Yes, it may happen in one moment, one minute, one day and it may happen for Zerodha, for a bank for any human being and all whom we see around us today.
The fact:
Zerodha and other broking firms act as registered agents who sell and buy securities on behalf of the clients and earn by charging commission on every buy and sell order and for some other services offered by them. It means if they buy, they buy in the name of the client and if they sell, it is sold in favour of the client. Thus they try to ensure the best deal for their clients.
But where the securities actually held ?
All stock brokers in India are required to be member of a stock exchange (BSE/NSE) and registered with SEBI. They are registered with either CDSL or NSDL (under SEBI), the only two Depositories in India where all the securities of a client are held. It means after the transactions (buy/sell of stock) are done the securities have nothing to do with the broking houses (as they are credited in your Demat account). You have opened your Demat account with your PAN card through your broker but from CDSL/NSDL.
So, you don’t have to worry if something like that happens with Zerodha and any other firm. CDSL or NSDL are there to hold your securities intact.
IPF: As per the SEBI guidelines, every exchange has to create and maintain Investors Protection Fund as a safety measure to ensure the compensation to the clients of a trading member/broking firm if the firm is declared defaulter or expelled by the exchange concerned. The fund is raised with contribution of the trading members/broking firms under the exchange. Total fund might have crossed Rs 1,000 crores and the same is yet to be utilized.
For further details please visit
- http://www.sebi.gov.in/cms/sebi_data/commondocs/ch16_p.pdf
- Modification to Investor Protection Fund (IPF) / Customer Protection Fund (CPF) Guidelines
- National Stock Exchange of India Limited
- What is "Investor Protection Fund" of BSE and NSE? - BasuNivesh
So, you are to get compensated.
One more thing comes out of the common sense that it is hardly possible that a broking house will shut down without notice. In that case there is always chance of opening another Demat account with other reliable firm and transfer your holdings there in time.
So, if you had any confusion regarding security, it might have gone by now.
You may now consolidate your faith in Zerodha.
So, you may instantly open your account online with your AADHAR by clicking here : Open an online trading and demat account with Zerodha and enjoy the lowest brokerage