Sebi said the charges levied by market infrastructure entities such as stock exchanges, clearing corporations and depositories should be uniform and not volume-based.
“This circular has a significant impact on brokers, traders and investors,” Kamath said.
Kamath, co-founder and CEO of India’s leading broker Zerodha, said stock exchanges charge transaction fees based on the overall turnover contributed by brokers.
“The difference between what the brokers charge the customer and what the exchange broker charges at the end of the month is the rebate, which goes to the brokers. Such rebates are common in major markets around the world. These rebates are around 10. % of our revenue and the entire With 10-50% of other brokers in the industry new circulars, this revenue stream goes away,” he added.
Stating that Zerodha was one of the last remaining brokers to offer free equity delivery trades, Kamath said they could do so only because the revenue from F&O trading subsidized equity delivery investors.
“With the new circular, we will, in all likelihood, have to drop the zero brokerage structure and/or increase brokerage for F&O trades. Brokers across the industry will also have to adjust their prices,” he said.
Exchanges often charge lower fees from brokers if they generate high volumes, which contributes to increased trading in segments such as derivatives.
Asking exchanges to stop the practice is part of a broader set of measures being discussed by Sebi to curb exuberance in India’s derivatives markets.
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