Sebi may revise fees for market entities

Fee hikes are being proposed against the backdrop of lower volumes in primary as well as secondary markets, resulting in reduced fee collections

The Securities and Exchange Board of India (Sebi) will soon consider a significant revision in the fees it charges from various entities so as to meet expenses for its regulatory and investor-centric activities.

A final decision on the proposed revision, which includes pushing back the fees to the level seen before a reduction was announced in 2009 for some intermediaries, would be taken after the issues are discussed by Sebi's board at a meeting scheduled for later this month, sources said.

The proposal to revise fees are based on recommendations made by a Committee on Rationalisation of Financial Resources (CRFR), which had detailed discussions and a ‘thorough study’ of various parameters.

Among others, it has been proposed to revise the fees for mutual funds, stock exchanges, brokers as also for the listed and to-be-listed companies for filing of offer documents, rights issues and takeovers. The fee rises are being proposed against the backdrop of lower volumes in primary as well as secondary markets, resulting in reduced fee collections.

According to Sebi estimates, the regulator’s operational income (fees from intermediaries) is expected to be about Rs 165 crore in the current financial year, ending March 31, and Rs 196 crore in the next financial year 2014-15. However, a revision in fee structure according to CRFR recommendations can boost Sebi’s operational income to Rs 378 crore in 2014-15.

At the current rates, Sebi is expected to post a deficit of Rs 66 crore on operational account in 2013-14, while the gap can further increase to about Rs 85 crore in next fiscal.

However, a revision in fees can help Sebi post a surplus of about Rs 98 crore in the next fiscal 2014-15.

Before the CRFR review, Sebi's total income for the year 2014-15 is estimated at Rs 372 crore, which would include Rs 196 crore as fees from intermediaries, Rs 158 crore as income from investments and about s 18 crore as miscellaneous income.

With adoption of CRFR recommendations, the total estimated income can rise to Rs 554 crore, on account of an increase in fee income.

The total revenue expenditure is estimated at Rs 281 crore for the next fiscal and this would remain unchanged even after CRFR review. The expenditure for current fiscal is estimated at about Rs 232 crore.

After taking into account capital and extraordinary expenditure, the regulator expects to post overall deficit of Rs 146 crore in current fiscal, ending on March 31. It was estimated at about Rs 77 crore.

However, a revision in fees as per CRFR recommendations can help the regulator post an overall surplus of Rs 106 crore.