Nearly seven months after SEBI introduced True to Label norms for transaction charges, leading exchanges NSE and BSE have interpreted the regulations differently.
While BSE has based its transactions fee based on trading volume, NSE has levied a flat fee depending on the market segments.
BSE charges a transaction fee of ₹375 per crore traded (0.00375 per cent) in stocks categorised in the privileged high volume scrips in Group “A” and “B”.
However, low volume trades in the “X” or “XT” group are charged a hefty ₹10,000 per crore (0.1 per cent). This leads to an investor buying ₹ 1 crore worth of a Group XT stock paying over 26 times more in exchange fees than if they bought a Group A stock.
SEBI’s new norms which came into effect from last October has prescribed that market infrastructure institutions must adopt a uniform, flat fee structure for charges in the same market segment, to ensure fair, transparent, non-discriminatory access for all participants.
Following the True to Label norms, NSE moved to a flat transaction fee of ₹297 per crore traded (0.00297 per cent) in the equity cash market for all stocks. Similarly, it standardised fees across derivatives including equity futures at ₹1.73 per lakh and options at ₹35.03 per lakh (premium) for all market participants.
“It is a matter of interpretation of regulations. It is not clear whether SEBI wants to eliminate only volume-based charges or is it against group-wise fee structure. Only regulator can clarify on this,” said the CEO of a leading stock broking firm, who did not wish to be quoted.
Responding to a businessline questionnaire, a BSE spokesperson said that BSE charges are transparent and fulfil true to label requirements and ensure that the levy on their members are directly passed on to the end client, without any hidden rebates or discounts, he said.
The scrips which are part of the “X” and “XT” groups are exclusively listed on BSE and generally tend to have lower liquidity. With a view to protect investor interest and to deter investors from excessive trading in such securities, differential charges are levied on this category of scrips since 2016, he added.
Asked why BSE should keep risky companies listed under X and XT group, the spokesperson said these scrips are also subject to regulatory oversight and many companies from the Group have transitioned to Group “A” or “B” over the years besides a few even getting listed on other exchange.
“Action of Suspension of securities is taken only as a last resort as suspension deprives investors of opportunity to exit their position,” he added.