Paytm Money introduces Future and Options trading

Stock and mutual fund investment app Paytm Money has rolled out Futures and Options trading. The feature, which is available via the app and its website, has received over 1 lakh requests for its early access program, according to Paytm Money’s chief executive officer Varun Sridhar.

For the uninitiated, Futures and Options trading are bought by retail investors at a predetermined price at a later date. While Sridhar claimed that over 50% of the requests are coming from tier-II and III cities, a very small amount of retail investors bet on Futures and Options trading.

“Since there are a lot of risks involved with blocking options and futures trading, retail investors usually stay away from short-term bets,” said Satish Meena, forecast analyst at Forrester India. “I am not sure how this feature will bring considerable scale to Paytm Money.”

Unlike Zerodha, Upstox and Groww, Paytm Money has kept a competitive brokerage at Rs 10 for Futures and Options trading. Zerodha, Upstox and Groww charge Rs 20 for such trading. Importantly, Edelweiss Lite charges Rs 10 brokerage fee for Futures and Options trading.

The addition of the new feature would make Paytm Money a more comprehensive investment platform. Besides stock investment, the platform enables investment into digital gold, mutual and NPS retirement funds. 

Currently, stocks and derivatives trading space has been dominated by Zerodha, Upstox and ICICI Securities. According to data released by NSE, the number of active clients on Zerodha was 31.42 lakh as of January 31, 2021. Upstox's active client base was recorded at 18.52 lakh followed by ICICI Securities at 13.47 lakh.

Paytm Money is not in the top three stockbroking apps in volume. However, the company is gradually beefing up its offerings under the leadership of Sridhar. The company competes with the aforementioned companies and other wealth management platforms.

Paytm Money has spent the last three years building its team and the framework to provide wealth management services in India. According to regulatory filings, analysed by Fintrackr, the company is still pre-revenue while its total expenditure jumped 2.5X to Rs 94.64 crore during FY20. Nearly 68% of these expenses were incurred on employee benefits as the company ramped up talent acquisition and annual losses amounted to Rs 92.41 crore during the fiscal ended in March 2020.