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All Brokers In India May Increase Their Fee

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Date of Posting: Monday, 08-July-2024

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I am sure by now you must have read or heard that the founder of India’s first discount broker Mr. Nithin Kamath (Nithin Kamath is the Co-founder and Chief Executive Officer (CEO) of Zerodha, the largest stock brokerage firm in India, headquartered in Bangalore, Karnataka) saying in social media platform X post, that they may need to reconsider their zero brokerage model or potentially raise brokerage fees for F&O (futures and options).

This after SEBI issued a circular mandating that all market infrastructure institutions, including stock exchanges, adhere strictly to their fee-charging practices.

I will explain what that circular is later but as of now if you trade derivatives should you worry?

NO.

Right now it’s a wait-and-watch situation. Don’t unnecessarily panic. Even if there is an increase in brokerages buying stocks, I think most will start with a Rs.10 increase, which is almost as good no increase.

Suppose you make a profit of Rs.1000/-. Right now you get 1000 – STT – Current Brokerage. After the increase in brokerage, you will get 1000 – STT – Current Brokerage-10-10. Just think what difference will it make to your life. Not much.

What exactly was the SEBI circular that may have led to an increase in brokerages across all brokers?

In its bid to create parity among market participants, concerning turnover charges, the Securities and Exchange Board of India (Sebi) on Monday, July 01, 2024, issued a directive to market infrastructure institutions (MIIs or the brokers) to levy a uniform fee, irrespective of the size of the market participants, essentially stock brokers.

Here is the circular:

https://www.sebi.gov.in/legal/circulars/jul-2024/charges-levied-by-market-infrastructure-institutions-true-to-label_84506.html

Stock exchanges charge a transaction fee based on the overall turnover contributed by a broker in a month. The more turnover, the lesser the transaction fee. You can see the latest slab-wise transaction charge charged by NSE here. The difference between what the brokers charge the customer and what the exchange charges the broker at the end of the month is a rebate. Such rebates are common across the major markets in the world.

Zerodha earns about 10% of its revenue from these rebates. This could range between 10% and 50% of the revenue for other brokers. With the new circular brokers will no longer earn these rebates.

So they have no option but to increase the brokerages.

But please do not worry especially if you are not an Intraday trader. For Intraday traders, this can be a problem.

You can do my course and become a non-directional positional trader and save on brokerages and taxes.




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Open ZERO Brokerage FREE Share Trading Account - Buy and Sell Stocks Without Brokerage - Set GTT (Good Till Triggered) Orders on System and Forget

Traditional brokers charge a lot for brokerage; however, this broker does not charge anything for stock buying and selling. Also, you can set GTT (Good Till Triggered) order after buying a stock, so that the system can sell the stock automatically at your target price even if you are not monitoring the market. Only 25k is blocked for option selling with hedge. Also, you get a lifetime free account in Sensibull (virtual trading app & strategy builder) which charges Rs.800/-+GST a month. It takes 5 minutes to open an account online. Click here and Open Free Account with Them Today >>

About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

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