The Securities and Exchange Board of India (SEBI) issued a new directive mandating that market infrastructure institutions (MIIs) such as stock brokers, depository participants, and clearing members, implement uniform and equal charges for all members starting July 1.
Previously, MIIs employed a volume-based slab-wise charging system. SEBI’s latest circular aims to eliminate this model, arguing it potentially compromises fair and equal market access, favouring larger players due to their ability to generate higher volumes.
The regulatory change is expected to significantly affect the revenue streams of brokerage firms by levelling the playing field among trading members. This could lead to a reduction in competitive advantages that larger firms hold under the current fee structure.
Additionally, the circular specifies that charges levied on end clients by MIIs should be “true to label,” ensuring transparency and that fees passed on to clients match those that MIIs incur. This aims to enhance fairness and clarity for investors.
Experts predict that this new policy may also impact overall trading volumes. The uniform charge structure could lead to changes in trading behaviours, particularly among retail investors who were previously disadvantaged under the slab-wise system.
