SEBI has rejected Brokers requested to set floor

By sums on Thursday,

SEBI has rejected Brokers requested to set floor to brokerage rates in India.

SEBI has rejected Brokers requested to set floorMarket Authority Securities and Exchange Board of India (Sebi) rejected the request broker to establish a floor brokerage fees. Brokers fear the fierce competition with the entry of several brokerage firms out of the market, brokerage fees might slide to unsustainable levels.

Brokers are concerned that the fierce competition, along with the entry of several brokerages off the market could be pushing down brokerage rates to unsustainable levels.

“The regulator has informally communicated to the riders who are not in favor of establishing any floor or minimum brokerage manner. The regulator believes that the measure could be anti-investor,” about SEBI has rejected Brokers requested to set floor said a broker, who declined to be identified.  A few months ago, the BSE Brokers Forum ‘had written to the governor, asking him to establish a minimum brokerage fee as competition from discount brokers was full-service brokers weight to reduce rates. Yet another brokerage association, Association of National Exchanges Members of India (Anmi), wanted the charges to be determined by the market.  Recent time , the houses are free of charge broke anything below a ceiling of 2.5 percent. An email sent to Sebi evoked no response.  The margins are very thin, as volumes are dominated by low-yield options, which contribute to about 80 percent of the total market turnover. For the money market, rates vary from 10 paise and 30 paise for delivery-based operations and below five rupees for intra-day operations.

According to Sudip Bandyopadhyay, CEO of Destimoney, the brokerage business has become increasingly unworkable as there is no significant compensation to offset rising costs. “A minimum level possible. Lowest commission have led to a decline in service levels, which is detrimental to customers in the long term.”

Some runners, however, believe that it is difficult to justify a minimum rate. “Putting a floor may not have the desired effect and brokerages can resort to malpractices such as” pass back “of brokerage to circumvent this rule,” said Gopal Agarwal, president, Anmi.  “At the end of the day, it is the customer who decides what to pay. This can be based on the quality of the research or advice and overall customer experience,” About SEBI has rejected Brokers requested to set floor said a broker who declined to be identified. Discount brokers are attracting customers for its ability to charge a flat fee per trade, regardless of the value of trade. This is just one implementation, web-based services and no research or advice offered model.

Source: business-standard



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