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SEBI’s July circular leads NSE and BSE to adopt uniform transaction charges from October 1, 2024. The impact varies across market players, with significant effects on discount brokers.
India's major stock exchanges, the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are set to revise their transaction charges effective October 1, 2024. This change follows a directive from the Securities and Exchange Board of India (SEBI) issued on July 1, 2024, which mandates a uniform fee structure for all Market Infrastructure Institutions (MIIs).
NSE Revisions:
Cash Market: Transaction fees are standardised at ₹2.97 per lakh of traded value, simplifying the previous tiered rates of ₹2.97 to ₹3.22.
Equity Futures: A uniform charge of ₹1.73 per lakh is applied, marking a reduction from the earlier variable rates up to ₹1.88.
Equity Options: Fees are set at ₹35.03 per lakh of premium value, streamlining the previous range of ₹29.50 to ₹49.50.
BSE Revisions:
Sensex and Bankex Options: Charges are now fixed at ₹3,250 per crore of premium turnover value, a change from the previous range of ₹500 to ₹4,950.
Equity Futures and Sensex 50 and Stock Options: These remain unchanged, with Equity Futures at NIL and Stock Options at ₹500 per crore of premium turnover value.
Negative Impact on Discount Brokers: The new, flat-rate fee structure is anticipated to adversely affect discount brokers such as Angel One, Zerodha, and 5Paisa. Under the old system, brokers could exploit high trading volumes to offer lower rates to the exchanges while charging clients higher fees, benefiting from the difference. The uniform charges eliminate this margin play, potentially reducing broker profits.
Neutral to Positive for Exchanges: For the NSE and BSE, this transition to uniform charges is likely to have a neutral to positive impact. The revision aligns more closely with average realisations, which helps maintain their revenue levels despite the changes.
As the market adjusts to this significant shift, the broader implications on trading volumes and individual investor costs will become clearer. The uniform fee structure aims to create a more transparent and equitable trading environment, potentially attracting more participants to the market.
While discount brokers may need to reassess their pricing strategies, the overall market stability and the position of the exchanges are expected to hold strong. The forthcoming months will be crucial for assessing the full impact of these regulatory changes on India's financial markets.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
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