Stocks of brokerages witnessed a sharp decline in the Tuesday trading session after the market regulator Securities and Exchange Board of India (Sebi) directed stock exchanges to levy uniform charges on brokers based on volume.
The brokers stocks like Angel one fell as much as 9 per cent followed by 4 per cent loss in Motilal Oswal and more than 3 per cent loss in SMC Global. 5 Paisa also dipped nearly 2 per cent in the afternoon session.
The listed exchange, Bombay Stock Exchange (BSE) also fell 3.47 per cent.
In a circular released on Monday, Sebi recommended that fees levied by market infrastructure institutions (MIIs), such as depositories, clearing companies, and stock exchanges should be uniform and unrelated to trade volume.
Exchanges frequently provide brokers a reduced price if they produce large volumes, which encourages trading in a variety of markets, including derivatives. Sebi is debating a larger range of actions to control the frenzy in India's derivative markets, including asking exchanges to discontinue this activity.
In a circular, Sebi highlighted that all market participants must have equal, unfettered, transparent, and equitable access to MIIs, which are public utilities and first-level regulators.
According to Sebi, certain MIIs now charge members (such stock brokers, depository participants, and clearing members) on a daily basis for their services based on volume and slab-wise pricing. MIIs then collect these fees from members on a monthly basis.
This procedure may result in a misrepresentation if the charges that end clients pay to the MIIs are less than what is collected from them. In order to solve this, Sebi ordered that fees be consistent rather than volume-based, guaranteeing openness and an even playing field for all market players.
