Sebi mulls uniform fee structure for equity, commex members

Commodity brokers want lower registration and transaction fees

The Securities and Exchange Board of India ( Sebi) has proposed treating brokers of commodity exchanges on a par with their counterparts in equity exchanges in terms of registration and transaction fees.

At present, commodity brokers are not under direct regulation of the Forward Markets Commission. The FMC is merging with the Sebi. In a recent meeting with representatives of commodity brokers, the Sebi said they should be treated on a par with equity brokers and, therefore, they must pay the uniform registration fee of Rs.50,000 per member. There were 3,399 members of three active commodity exchanges in March.

Some may be common to more than one exchange. The Sebi also said there should be uniformity in fees, 0.02 per cent of the transaction, or Rs.200 for every Rs.1 crore of transaction on the futures platform.

The Sebi is in the process of framing guidelines for commodity brokers’ registration ahead of its merger with the FMC. Registration of commodity brokers is set to start by the end of August. The FMCs merger with the Sebi is expected to be completed by September.

Commodity brokers, however, urged the Sebi to distinguish between members of national and regional exchanges, and sought differential treatment for commodities on which the commodity transaction tax was levied.

Sources said commodity brokers had proposed a registration fee of ? 50,000 for a national- level broker and ? 25,000 for a regional player.

"We argued that members of regional exchanges have limited financial strength and hence should be allowed to pay less. For national- level players, the registration fee of ? 50,000 is okay," they said.

Regional players are needed in the system for market development. The meeting discussed incentivising regional players to allow them to operate smoothly. So, fees should be applicable across the entire trading chain but regional players should be given a breather. A final decision on this is awaited.

Commodity brokers have urged the Sebi to set a transaction fee of 0.1 per cent, or Rs.100 for every Rs.1 crore of transaction, in commodities on which the commodity transaction tax is levied like gold, silver, base metals and processed agricommodities.

For farm goods like guar, the transaction charge proposed was 0.005 per cent, or Rs.50 for every Rs.1 crore of transaction.

Regional bourses seek lower fee

Regional commexes have expressed their concerns over registration fee, which the Securities and Exchange Board of India ( Sebi) proposes to charge from their members. At present, there are three regional commodity exchanges and have 329 members as on March 2015. The commodity exchanges in Rajkot and Hapur have requested the regulator to either do away with such fee or charge at a nominal rate of Rs.10,000 per broker instead of the uniform registration fee of Rs.50,000. While the Rajkot Commodity Exchange (RCX) is known for castor trading, Hapur is known for mustard contracts in India.

“ Rs.50,000 is a very big amount for the brokers active in regional commodity exchanges. We have urged Sebi not to impose any fee or charge nominally,” said Rohit Garg, chairman of Hapur Chamber of Commerce know as Hapur Commodity Exchange in Uttar Pradesh. The Hapur Exchange has 200 members and has a daily turnover of about Rs.80- 100 crore.

The Rajkot Commodity Exchange has also told Sebi that one- time registration fee should be ? 10,000 or less. "Regional exchanges are still in the growing stage and are very small. We have, therefore, urged officials member registration fee should be less to make it affordable for members," said P B Pathak, executive director of RCX.

Business Standard, New Delhi, 29th July 2015