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Sebi weighs cut in turnover fee

Subhomoy Bhattacharjee & P Vaidyanathan Iyer

The Securities and Exchange Board of India is considering reduction in the turnover fee being charged from brokers at its board meeting on Wednesday.

Sebi had sought the opinion of the Solicitor General who has apparently advised it that there is no bar on it to reduce the turnover fee on brokers from the current level of 0.01 per cent.

The issue has been one of the major demands of the stockbrokers in the run up to the demutualisation of the bourses.

The agenda also includes the issue of demutualisation of the exchanges as announced by the finance minister in March this year besides flexibility in pricing open offers made by strategic bidders in public sector undertaking.

The opinion of the solicitor general has been a follow up to a case fought by the brokers in the Supreme court saying that Sebi should not be allowed to impose any turnover on the brokers.

They had contented that as the they pay transaction charges to the exchanges there was no need for any further charges and have refrained from paying their arrears so far citing the meltdown in the equity market. They have also appraised the finance ministry of the issue.

While the Supreme court had turned down the contention, it had generally left the issue of turnover fee to be decided by Sebi based on the recommendations of a committee appointed by the regulator itself. The committee report had suggested that the quantum of the fees can be reduced.

The issue has acquired an urgency as the last date for the brokers to pay their arrears is December 31, 2001 and the government is keen to put an end to the impasse before that.

When contacted, top Sebi officials said they are yet to officially get the opinion from the solicitor general. But they said the issue is likely to be part of the agenda along with the question whether PSUs taken over by private players in disinvestment need to make an open offer at the 26-week average market price preceding the offer.

On demutualisation, sources said since the finance ministry has already advised Sebi that a change in subordinate legislation of the Securities Contract Regulation Act is sufficient to begin the process, it is up to the market regulator to announce a time bound schedule to convert all exchanges in the country into corporate entities.

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