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BSE brokers to discuss turnover fee with Sebi

NetScribes/Pallavi Rao & Salil Panchal

The turnover registration fee issue at the Bombay Stock Exchange has taken a new turn. The Brokers' Forum of the exchange is set to meet the Securities and Exchange Board of India to discuss the issue and finalise what could be the final amount that brokers would have to pay towards the fee.

"We are going to negotiate this issue with Sebi. There are issues linked to corporation and merger of cards, which is linked to this issue and needs clarification," said Mohan Vijayan, chief of the forum.

The broking community has, however, clarified that this is not akin to appealing against the Supreme Court ruling. A January 16 Supreme Court judgement said that brokers would have to pay Sebi 0.01 per cent of their daily turnover as a registration fee. This was to be done with retrospective effect from as far back as 1992 in certain cases.

"The 0.01 per cent fee was designed by the RS Bhatt Committee when brokerage charges were at 1 per cent of the transaction cost. Now, since brokerage rates have fallen by over 60-70 per cent over previous levels, the 0.01 per cent fee will take away a large portion of the turnover," said Vijayan.

In its written submissions, Sebi had put a final figure of Rs 4.19 billion as turnover fees to be received from about 9,000 stock brokers across the country. The forum has contested the claims, terming them 'highly inflated' and 'a desperate attempt to sustain the fees levied on brokers'.

According to the forum, during the 11 years period since its inception (1988-89 to 1999-00), Sebi had made a total revenue and capital expenditure of Rs 1.95 billion.

The brokers are also keen to re-negotiate issues of corporatisation and mergers. This is because, over the past decade, several brokerages have turned into corporates from sole proprietorships. Consequently, their accounting patterns have also changed.

Further, where brokerage firms have merged, the turnover levels have altered, giving rise to issues which would need to be addressed prior to making the payment.

National Stock Exchange brokers also seem confused about the payment of the registration fee. While they have not approached the exchange, a section of the NSE brokers have suggested a relook at the proposal.

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