Hit by the newly introduced commodity transaction tax, the National Commodity and Derivatives Exchange slashed transaction charges for members who register an average daily turnover of Rs 200 crore.
The cut in transaction comes at a time when competing exchange, Multi Commodity Exchange, is facing a huge drop in trading interest.
The revised tariff, which comes into force from September 1, would make trading more cost effective for market participants and widen the customer base, said NCDEX in a press release on Tuesday.
The cost of transaction in online commodity exchanges has shot up since July, after the government introduced a new commodity transaction tax of 0.01 per cent. The tax was earlier planned to be levied only on metals and non-agriculture commodities.
However, when the tax was notified it included processed agricultural commodities such as sugar, soya oil and guar gum, which account for a major chunk of trading volume. Other exchanges may also be forced to reduce transaction tax to stem the sharp fall in trading volumes.
Samir Shah, Managing Director (in charge), NCDEX, said that the reduction in transaction charges is one of the many steps that the exchange is taking in the interest of the market, which is going through challenging times.
For members who trade below Rs 200 crore, the transaction charge will be Rs 2 for one lakh of trade. On the other hand, members who log in average daily turnover above Rs 200 crore, the charges will be Re 1 , which translates to Rs 45,000 against Rs 62,500 paid earlier. This will reduce their cost by almost a third. Earlier, the exchange had lower tariff for members doing a daily turnover of Rs 250 crore.
There has been a growing demand from the market to provide a favourable transaction charge structure, aimed at encouraging larger participation from retail customers, said the exchange.
NCDEX believes this revised structure provides a level playing field to members and will encourage broader market participation while rationalising their costs.