Sebi's uniform charge rule faces BSE test amid concerns over fee structure

Market participants raise concerns over BSE's varying transaction charges, while BSE defends its transparent, regulation-compliant fee structure

Several market participants have raised concerns over BSE’s transaction charges, alleging inconsistencies with the Securities and Exchange Board of India’s (Sebi’s) ‘true-to-label’ circular. 

 

They argue that BSE is imposing varying fees for scrips across different segments, contrary to Sebi’s push for uniform charges.

 

Last July, Sebi mandated standardised transaction fees for all stockbrokers, eliminating volume-based pricing slabs. However, brokers claim that BSE continues to levy differential charges based on trading volumes, categorising scrips into exclusive and non-exclusive groups.  

 

“Sebi’s circular aimed to create a level-playing field, but BSE’s classification-based charges go against its spirit. This requires regulatory intervention,” said a broker.

 

He added that while BSE’s fees are higher than National Stock Exchange’s (NSE’s), the latter imposes additional Investor Protection Fund Trust (IPFT) charges.  

 

According to market players, high-volume scrips in BSE’s Group ‘A’ or ‘B’ attract a low fee of 0.00375 per cent, while low-volume groups face charges as high as 0.1 per cent. 

 

BSE, in its response to queries, said its charges are transparent and fulfil true-to-label requirements. 

 

It added that they also ensure that the levy on their members is directly passed on to the end client, without any hidden rebates or discounts.

 

“The scrips which are part of the ‘X’ and ‘XT’ groups are exclusively listed on the BSE and generally tend to have lower liquidity. With a view to protect investor interest and deter investors from excessive trading in such securities, differential charges are levied on this category of scrips since 2016. Being part of these groups does not imply non-compliance. These scrips are also subject to regulatory oversight,” said a BSE spokesperson.

 

Emailed queries to Sebi on any clarity remained unanswered till the time of going to press.

 

Sebi’s circular, issued in July 2024, addresses concerns that brokers were recovering certain charges from end clients on a daily basis. However, market infrastructure institutions (MIIs) were receiving the aggregate charges from the members on a monthly basis.

 

Sebi feels that the process resulted in a situation where the aggregate charges collected by the brokers from end clients were higher than the charges paid by the broker to the MII due to the slab benefit.

 

The changes, also called as flat fee, brought uniform charges for all brokers irrespective of the volumes.

 

“The charge structure of the MII should be uniform and equal for all its members instead of slab-wise viz. dependent on volume/activity of members,” said the Sebi circular dated July 1, 2024.

 

Market players had estimated a dent on the revenue of discount brokers owing to a flat fee from exchanges.