Derivatives

Know about option transaction fees

Bavadharini KS BL Research Bureau | Updated on July 31, 2021

Fees and charges are payable by traders and investors to brokerages when it comes to trading or investing in stocks and derivative instruments. These charges include securities or commodities transaction tax, Goods and Service Tax (GST), transaction charges, brokerage fee, stamp duty charges, SEBI charges and any penalties.

Recently, MCX, one of the largest commodities exchanges in the country, has said it will reintroduce transaction fees on option contracts with effect from October 1, 2021. The same would be passed on to traders, hedgers and investors alike by the brokerages. Transaction charge of ₹50 per lakh of premium value on average daily premium turnover of up to ₹5 crore will be applicable. On incremental premium turnover, the charges would be ₹40 per lakh of premium value. The transaction charges on options contracts, however, are waived till September end this year.

For Commodity Futures Group A, comprising 28 commodities, 0.0026 per cent is charged on the value of the transaction. In case of Group B, the charges vary with the commodity transacted. For instance, for castor seed contract, it is 0.0005 per cent of transaction value while it is 0.0026 per cent for kapas contract. On the other hand, in equity derivatives options, a transaction charge of 0.053 per cent on premium is levied by the brokerages and this is 0.002 per cent of transaction value in case of equity futures.

Send your queries to derivatives@thehindu.co.in

Published on July 31, 2021

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