Brokers seek reduction in option trading charges at NSE

Say that a reduction in transaction charges will encourage members to increase the volume of business

Concerned over high costs of doing their business, brokers have requested top bourse, the National Stock Exchange (NSE) to consider lowering the transaction charges for options segment in derivatives and currency trading markets.

In a letter to NSE, an apex body of trading members of all national exchanges in the country has contended that they are "unable to comprehend high differential in transaction charges" levied in the option segment for futures and options and currency markets. While transaction charges vary from one exchange to the other, all of them have differential charges for different market segments. Besides, the charges are also typically linked to the trading volumes and the rates are lower for larger volume of trades.

The letter, written by Association of National Exchanges Members of India  earlier this month, follows a representation made by an ANMI delegation before the NSE. The industry body further said a reduction in transaction charges “will only encourage members to increase the volume of business that is being placed through NSE.”

"Amongst several points made in the representation we have highlighted that the transaction charges levied by NSE on Options segment (F&O and Currency) is exorbitant.

"You are aware that transaction charges on purchase and sell of Options is 0.05 per cent of the premium, while the transaction charges in the equity delivery segment and in the equity intraday is only 0.0031 per cent," ANMI wrote.

Pointing out that the market regulator Sebi's turnover charges were same across segments, ANMI further said that stamp duty charges on equity intraday segment and stamp duty levied on options is also uniform.

"Members are therefore unable to comprehend high differential in transaction charges levied by you in option segment (F&O and Currency).

"We would like to further draw your attention that apart from statutory dues mentioned above there is incidence of STT (Securities Transaction Tax) and service taxes, which increases the cost of transactions.

"You are aware that the volumes in options segment (F&O and Currency) have grown considerably whereas the high cost of transaction has only translated in reduced brokerage levels for the industry.

"In view of these circumstances we request NSE to review the transaction charges and to revise the same downwards," it added.