4 Jul 2024
In its circular on July 1st, the Securities and Exchange Board of India (SEBI) directed the exchanges to scrap the slab-based pricing system for stockbrokers.
Stock exchanges offer slab-based pricing and rebates to stockbrokers based on the trade volumes they generate per month. This translates as the higher the trading volume, the bigger the discount, and helps stock exchanges improve trading across segments. This is bound to stop from October 2nd 2024.
The circular states that Market Infrastructure Institutions (MIIs) like stock exchanges, depositories and clearing corporations must be “True to label” in their fee structure effective October 2nd, 2024.
It directed market intermediaries to stop offering stockbrokers rebates for issuing large trading volumes. It further asked stockbrokers to charge their customers only the amount they need to pass on to the exchanges and not seek rebates from exchanges.
This impacts stockbrokers, traders and investing customers (retail investors). Discount brokers like Zerodha, Groww, AngelOne, and Upstox built their brand image around zero or lower brokerage fees, which will be impacted.