India's $1 trillion broking industry is built on fragile tech and one glitch could bring it all down. Zerodha CEO Nithin Kamath just sounded the alarm on a risk lurking beneath every trade.
In a LinkedIn post, Kamath exposed a little-known truth about stock brokers: most don't control the core technology that runs their trading platforms. Instead, they rely on third-party systems to handle Order Management (OMS) and Risk Management (RMS), the twin engines that process trades and monitor client exposure.
“These are the heart of a broking operation,” Kamath wrote. “If this breaks, trading stops.”
Kamath compared these systems to the core banking software that runs major banks. In the brokerage world, vendors like OmneNest, Kambala, 63 Moons, and Rupeeseed dominate. OmneNest alone handles about 70% of the market, including Zerodha's own operations.
That centralisation, Kamath warned, creates a single point of failure. And yet, few brokers are willing to take on the risk of building their own systems. “It's extremely hard and complex,” he said, revealing that Zerodha has been developing an in-house OMS/RMS for nearly four years.
The transition isn't just technical, it's existential. “You're migrating live client positions while ensuring nothing breaks,” Kamath wrote. “One mistake and you could have trades going wrong, margin calculations failing, or clients unable to exit positions.”
He likened the process to “rebuilding the plane while flying it.” And for large-scale brokers like Zerodha, with lakhs of active users trading daily, the stakes are enormous.
Regulatory turbulence makes it even harder. “Constant regulatory changes need to be incorporated into the system, and each change is a potential breaking point,” he added.
Despite the obvious risk of vendor dependency, Kamath admitted there's little immediate incentive to go in-house. “Clients don't ask. And vendor costs haven't caught up with the phenomenal growth in brokers over the last five years,” he said. “So the immediate financial case isn't obvious.”
His post offers a rare look at the hidden infrastructure behind India's fast-growing brokerage space and the quiet crisis no one wants to talk about.
“It's easier for a broker starting from scratch,” Kamath said. But for the rest, the path to independence could be the riskiest move of all.
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