The Hindu : Business : SEBI panel moots revised broker fee

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Friday, Aug 05, 2005

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Business

SEBI panel moots revised broker fee

Special Correspondent

Comments invited before August 20

CHENNAI: A committee appointed by the Securities and Exchange Board of India (SEBI) on the registration fee structure for stock brokers has recommended that for "new brokers'' in cash equity and debt segments the fees may roughly constitute one per cent of the prevalent average brokerage rates.

While declaring that there "need be no direct relationship between the level of fees and the brokerage income,'' the committee, headed by D. C. Anjaria, has suggested the following fee structure per Rs. 1 crore of turnover: brokers in cash equity Rs 100; cash debt Rs 5; derivative segment Rs 50; Since the recommended rate in the derivative segment is substantially higher than the current level of Rs 10 per Rs 1 crore of turnover, the committee has suggested to SEBI to consider upward revision of the fee in a phased manner by increasing from Rs 10 to Rs 20 per Rs. 1 crore market turnover as now defined by the committee in the first instance and increase it to Rs. 50 per Rs. 1 crore of market turnover "over a period of time.''

`New broker' definition

SEBI may clearly define who would be construed as "new brokers'' .

All brokers who obtain fresh registration certificates after the issue of regulations incorporating the recommended fee structure may be considered as new brokers. However, in the derivatives segment , the revised structure should apply to all brokers.

Top SEBI sources in Mumbai said the report, which was received by the regulator in November 2003, was on Thursday put up for the first time for public comment.

SEBI has invited comments on the report (to be emailed to anjariacom@sebi.gov.in) on or before August 20. The report, which was submitted by the reconstituted committee , has suggested that all types of transactions — delivery; or non-delivery; proprietary or non-proprietary — "without exception'' should attract fees because all types of transactions require the same level of SEBI supervision. While the fees may be different for each major market segment, they should be uniform for all types of transactions in a given market segment.

The existing structure of registration fees incorporates the recommendations of the R. S. Bhatt Committee on the direction of the Supreme Court and provides for differential treatmentfor some categories. Otherwise, normal transactions attract a fee liability of one-hundredth of one per cent.

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