I understand your concerns but the fact is that FYERS is the safest brokerage to hold funds & securities. Why? I've explained this several times before across platforms and also wrote a blog post when Karvy blew up19. Here's a list of the most important reasons:
- FYERS Doesn't do prop-trading - Unlike most brokerages, FYERS doesn't indulge in proprietary trading. We didn't even apply for a prop license in the broking entity. This ensures that the client's funds are never risked for the broker's benefit. You might think I'm crazy for even saying this because a client's funds should not be used by definition because it belongs to the client, right? But the reality of the matter is that many brokers do/did this. Most retail investors didn't understand why this was important until they started witnessing brokerages default/get expelled or shut shop abruptly left and right due to losses incurred in prop/misappropriation of funds.
- FYERS manages clients' trading risks conservatively - We're among the few brokerages in India that refrained from providing unreasonably high leverage to clients when everyone was going crazy about shorting options. We realized that it's not worth getting a few additional trades at the expense of a potential blow-up that many brokerages were exposed to especially between 2018 and 2020. In this phase, several brokerages that didn't handle risks carefully went bust. To date, we provide among the least leverage in the industry (Thanks to peak margins it is now standardized for all brokers). We believe that it is good for the long-term survival of retail traders.
- Safety measures to protect client assets - Clients' unused funds are deposited with the most respected and profitable banks of India. Also, since funds are with multiple reputed banks, it's diversified. Clients' stocks/holdings are stored in the client's own Demat accounts at an individual level and not the broker's beneficiary/pool/other accounts. This makes a huge difference. We've been practicing this way before the new regulations to standardize the movement of funds & securities were announced by SEBI. Other than that, we've implemented CDSL's E-DIS system which allows our clients to operate their own Demat account (Without giving us a POA)7.
- Secured to prevent unauthorized trading - As a matter of principle, FYERS doesn't give dealing terminals/trading access to Authorized Persons (APs). For decades, such access has enabled unscrupulous brokers & their associated individuals to wipe out clients' account balances without their slightest knowledge by trading on their behalf. Many traditional brokerages were/are famous for this. When we started, we made it clear that we would never compromise the safety of funds & securities lying in client accounts and clients alone would be in full control of their own accounts.
- We're debt-free - We never raised loans to grow our company and as we stand today, we're 100% debt-free. Never raised a dollar from banks or NBFCs because we knew it wasn't worth the risk. Why? Stockbroking is a volatile business in which cash flows are uncertain. One bad season can cause a huge dent in revenues as it invariably happens from time to time. All it takes is 20 to 30% correction in the benchmark indices. Since we don't have any debt to repay, we are not under any pressure to take on additional risks to earn revenues. This is a big positive for customers.
- We're profitable too - We live in an era of funded startups that don't understand why profits are necessary. We, on the other hand, have focused on long-term sustainability rather than hyper-growth at any cost. A balanced approach to scaling our business helped us become profitable early on and generate the cash flow required to scale up without raising VC money (So far). The dynamics of our industry are fast-changing and having the ability to remain above the water amid disruptive regulations is sacrosanct. This mindset alone is a key differentiator.
- We don't lend - Since inception, we didn't indulge in short-term lending through margin funding, T+5, or any other tricks in the book to provide credit to customers. We also don't lend against stocks and hence there's no credit risk in the event clients default on payments when pledge collaterals have gone below the threshold of recovery. Since we don't lend, we don't carry this risk either.
- High Compliance Standards - Since we conduct business in a transparent manner, our compliance has always been on the mark (As per the regulatory requirements). Over the years, we've been routinely inspected by the exchanges, depositories, and SEBI. We don't believe in shortcuts or get-rich-quick schemes so it was never an issue, to begin with.
All the above factors ensure that your funds & securities are safe and that you need to worry about the market, not our credibility. There's a reason why over 80,000+ aware & knowledgeable traders/investors trust us.