Introduction to the New Transaction Fee Structure in Indian Stock Exchanges
Starting on October 1, 2024, the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) are set to implement a significant overhaul of their transaction fee structures. This change follows a regulatory directive from the Securities and Exchange Board of India (SEBI), which was announced via a circular on July 1, 2024. The new scheme mandates that Market Infrastructure Institutions (MIIs) such as stock exchanges, clearing corporations, and depositories move away from the existing slab-wise fee model based on trading volumes. Instead, a uniform transaction fee structure will be applied across all members.
Key Changes in Transaction Fees
Adjustments to the NSE Fee Structure
The NSE has introduced several adjustments:
| Market Segment | New Fee (₹) | Previous Fee Range (₹) |
|---|---|---|
| Cash Market | 2.97 per lakh value traded | 2.97 to 3.22 |
| Equity Futures | 1.73 per lakh traded value | 1.73 to 1.88 |
| Equity Options | 35.03 per lakh premium value | 29.50 to 49.50 |
Modifications in BSE Fee Structure
The BSE has announced that while there will be no change in transaction fees for Equity Futures, Sensex 50, and Stock Options, modifications are being made for options linked to Sensex and Bankex. These will now incur a fixed charge of ₹3,250 per crore on premium turnover value, as opposed to the previous slab rate ranging from ₹500 to ₹4,950.
The Impact on Discount Brokers
This new fee structure is perceived to adversely affect discount brokers such as Angel One, Zerodha, and 5Paisa. Previously, brokers benefitted from the difference between lower transaction fees incurred at high trading volumes and relatively higher fees charged to clients.
For instance, brokers could charge clients up to ₹49.50 per lakh premium value for equity options, while paying merely ₹29.50 per lakh when trading volumes exceeded ₹2,000 crores. This differential allowed brokers to pocket the difference as profit.
Projected Revenue Impact
Based on current estimates, trading platform Zerodha may experience a revenue drop of approximately 10% under the new fee structure. Similarly, management insights from AngelOne suggest that around 8% of the company’s revenue could be affected by these changes.
Industry experts believe that while these alterations may present challenges for discount brokers, they are unlikely to negatively impact the revenue generated by the exchanges themselves. Investors may witness an overall reduction in transaction fees, fostering a more equitable trading environment among members. Although discount brokers might face challenges, this reform is positioned to level the playing field across the industry.
