Brokerage Stocks Fell Up To 11% As SEBI Asks Exchanges To Charge All Members Uniformly

Broking stocks including Angel One, IIFL Securities, 5Paisa Capital, SMC Global, Motilal Oswal Financial Services and Geojit Financial Services fell up to 11 per cent
SEBI
SEBI

Shares of Indian brokerage firms fell sharply on Tuesday after market regulator Securities and Exchange Board of India (SEBI) asked market institutions like exchanges to levy uniform charges on brokers that are not based on volumes.

Broking stocks including Angel One, IIFL Securities, 5Paisa Capital, SMC Global, Motilal Oswal Financial Services and Geojit Financial Services fell up to 11 per cent. On the other hand, the BSE Sensex was trading at record high levels, up 0.23 per cent at 79,662.64.

Shares of exchange operator BSE fell over 2.7 per cent to Rs 2,504. Angel One was the top loser, falling around 11 per cent to Rs 2,339.20. IIFL Securities also plunged about 7.5 per cent to touch an intra-day low of Rs 192.30.

Among others, 5Paisa was down 4.5 per cent, SMC Global 2.4 per cent, and Motilal Oswal Financial Services was trading 2.81 per cent down, and Geojit Financial Services fell 2.8 per cent.

SEBI has asked stock exchanges and market infrastructure institutions (MIIs) to discontinue their current practice of imposing slab-wise fee structures. To ensure a level playing field for big and smaller players in the broking industry, the regulator has said charges levied by MIIs on members should be uniform and equal irrespective of the volume generated.

The move is also aimed at curbing the surge in derivatives trading as there will be no additional benefit for members for generating high volume. Futures & Options traders contribute to a significant share of the overall market trade.

In a circular released on Monday, SEBI directed MIIs to redesign the existing charge structure and associated processes. This will come into effect from October 1, the circular said.

In addition, the regulator noted discrepancies where brokers charge their clients daily but settle fees with exchanges on a monthly basis, potentially leading to confusion or misleading disclosures about charges to end clients.

“It has also been observed that members generally recover such charges from the end clients on a daily basis whereas MIIs receive aggregate charges from the members on a monthly basis,” SEBI said.

SEBI noted that the matter was deliberated with the Secondary Market Advisory Committee. The committee observed that apart from impacting transparency, the existing slab-wise charge structure can also create a hindrance for the MIIs in ensuring equal and fair access to all market participants.

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