Spot A Price Gap? Nithin Kamath Explains How Traders Can Benefit From Inter-Exchange Arbitrage

Retail traders can exploit price differences between exchanges by buying a stock on one and selling it on another, Zerodha Co-Founder Nithin Kamath explained in a recent post on X.

The feature, available on platforms like Zerodha, allows traders to capture arbitrage opportunities between the NSE and BSE, Kamath wrote.

According to his post, traders can purchase shares for intraday on one exchange and exit the position on the other by simply selecting the exit exchange from the positions page.

This flexibility ensures that margins are released immediately, making the process efficient and seamless. Importantly, Kamath clarified that this option is available regardless of whether the trade is intraday or delivery-based, giving retail investors more room to maneuver.

Inter-exchange arbitrage works because stock prices can differ slightly between exchanges due to liquidity and demand variations. For example, if a stock is priced marginally lower on NSE compared to BSE, a trader can buy on NSE and sell on BSE to pocket the difference.

While these gaps are usually small, high-volume traders or those using automated strategies can benefit from such opportunities.

Kamath’s post highlights a feature many retail traders are unaware of, despite its potential to optimise returns without taking directional market risk.

Despite this, investors need to be cautious as arbitrage requires quick execution and monitoring, as price gaps can close within seconds. Transaction costs and brokerage charges should also be factored in before attempting such trades.

By drawing attention to this mechanism, Kamath spotlights the tools available to retail investors in India’s growing equity markets.