Orion broking bankruptcy – lesson to learn!

orion

Fellow traders & investors,

Has been a while since I wrote a post. Writing this to reiterate the lessons to learn while choosing a broker. I had written this post when Unicon securities went bankrupt a while back, saying how we should not go with any broker who seems willingly wanting to violate rules and regulations.

Orion broking had its primary website as : http://www.orionbroking.com/ offering brokerage services in both Equity and Commodity. The company which is based out of Coimbatore, the promoters are currently underground. Cops are investigating the case now, check this news article. 

Have interacted with the promoters a few times, and they for sure are definitely not crooks. Their business model was to entice clients with extreme amounts of leverage. Trade with Rs 2000 for 1 lot of Nifty and Rs 3000 for Bank nifty. In commodities they would give any leverage that you ask for, even let you trade the big gold contract with less than Rs 5000 in the account. The website doesn’t really talk about these leverages anywhere, but if you speak to any of their clients you will know.

On August 20th, Globe capital who is a clearing member of Orion squared off all their positions due to not being able to meet the MTM(marked to market) requirement. Standing now, after the positions were squared off, Orion owes over Rs 40 crores to Globe capital and the exchanges. This is after Orion broking’s personal and client funds which was already debited by the exchange/clearing member to meet obligations. Client funds would have anyways been debited, but what is shocking is that the promoters even liquidated stocks lying in the client demat accounts to meet exchange obligations. So currently all clients of Orion broking who had any money or stock with them are in a soup. Yes, there is Investor protection fund by the exchanges, but it will take its own sweet time.

*An update on Orion Broking Services – The active directors of Orion Broking Services have been arrested on 8th March 2016, on the grounds of the following as per the Indian Penal code –

1. Section 120B (punishment for criminal conspiracy)

2. Section 409 (criminal breach of trust by public servant, or by banker, merchant or agent)

3. 420 (cheating and dishonestly inducing delivery of property)

Kindly go through this article to know more :- http://www.thehindu.com/news/national/tamil-nadu/prime-accused-in-stock-broking-scam-held/article8333481.ece. A further probe is now being instigated against them.

Lesson to Learn? 

This just goes to show that, chasing the broker who provides the highest margin may not be the best thing for you. Leverage is a double edged sword, it can not only wipe out your account in a hurry, but also the broker’s. Ensure that you choose a broker who is not over leveraging themselves and their clients.

 

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Empowering Indian retail investors/traders,

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Best trading platform in India? – Sharekhan Trade Tiger or Zerodha Pi ?

Fellow Traders & Investors,

My vote goes to Zerodha Pi and following is a comparison and my basis for considering Zerodha Pi as the best trading platform in India. There are certain pluses TradeTiger has over Pi, but overall after using both for the last few days, I think Pi is better.

Check this link to compare Sharekhan vs Zerodha in terms of everything else.

There are currently only these two contenders for the top spot. India Bulls was a close contender to be part of the top 3, but considering how disinterested the promoters are towards stock broking I have left them out.

Resource Management

Memory usage : Pi uses 1/3rd of what TT does.

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Memory usage

CPU usage: Pi is generally lesser than TT

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CPU Usage

Bandwidth/Network Usage: Usage of Pi is lesser than TT

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Network usage

Marketwatch

Multiple Marketwatch: TradeTiger has an option to add multiple marketwatches, on Pi the workaround is to use workspaces.

blgo4
Tradetiger multiple marketwatch
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Workspaces on Pi

Adding scrips: Easier to add scrips on Pi vs TT

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Adding scrips on TT
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Adding scrips on Pi

Charting

Intraday data: TT has it only for the last 30 days. On Pi you can pull upto 365 days and more (maximum of 20,000 candles).

Historical data: TT has 10 years whereas Pi has for 5 years.

Time frame settings: TT scores over Pi, you can switch from one time frame to other quite easily. New charts have to be opened in Pi.

Indicators: Pi has 80+, whereas TT has 16+. Pi has more indicators and also has the crosshair function

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30 days intraday data on TT
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upto 20,000 candles – 365 days or more of intraday data.

Trading from the chart: feature available only on Pi.

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Trading from chart on Pi

Number of charts at one time:

TT: Maximum 5 charts

Pi: Maximum 12 charts

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Maximum charts: 5 on TT
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Maximum charts: 13

Option Calculator

TT has it whereas Pi doesn’t as of now.

Price alerts

Straight forward in TT, a little complex on Pi, you have to use expert advisor or scripted alerts. The advantage with Pi though is that the scripted alert/expert advisor can be used not just for price, but for any technical analysis based strategies. You can have multiple expert advisors searching and scouting for trading opportunities. You can also create consensus report using multiple EA’s.

1
Price alert
2
Scripted alert/expert advisor on Pi
3
Consensus report using multiple EA’s

Research calls and reports

Sharekhan has an active advisory desk, which gives out research reports which are accessible on TT.

Since Zerodha doesn’t do any research, you can’t see any fundamental data on Pi.

Overall after using Pi for the last week alongside TT, I think it is better overall. So my vote is definitely with Pi for the best trading platform in India.

Empowering Indian retail investors/traders.

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Samco – Indian Trading League – Review

Fellow Traders and Investors,

All these advertisements by Kapil Dev for Indian trading league spawned my curiosity. I gave them a call which ended at Samco securities, the execution broker for Indian trading league. That is when I realized that this entire initiative is by Samco and Kapil Dev has invested into Samco.

We have already added Samco on our list of 70+ brokers where you can see everything from financials to hidden charges to everything else. Click on this link to check the review about Samco.

Samco seems to have been inspired by Zerodha, not just in terms of their pricing model, but also the Indian trading league being an extension of the Zerodha’s 60 day challenge. They have also gone one step ahead seemingly infringing the copyright violations by copy pasting a few of the pages from Zerodha whose website has been live for the last 4 + years. A couple of examples are given below:

Zerodha.com

zerodha1

Samco.in

Note that even the savings number shown by default matches Zerodha

samco1Zerodha.com

zerodha2

Samco.in

samco2

My verdict on Samco, and should you start a relationship with them? 

1. Samco is erstwhile Samruddhi Securities, and this is their rebranded initiative. The financials of the company even after being in business for a very long time is quite ordinary. If you visit the link on comparebrokerages for Samco, you will see that profits are less than Rs 10lks/year for the last 3 years. The entire balance sheet size for last year (equity and commodity business together) is only around Rs 15 crores, which is the least among all the discount brokers out there. So the question arises if all these prizes – especially Rs 1 crore for the winning trader is actually for real, or just a marketing gimmick to get leads. Yes, they have a new investor in the business, but the question still arises on why would someone invest in a business like this which has quite a bad track record.

2. When this news article was released by ET on May 6th, the website Indiantradingleague.com by mistake was open for public for a few minutes. I guess they realized the folly and shut it down within 5 mins. I was one of the lucky few to have checked out what it was all about even before the launch. They were running a marketing blitz under #eknayileague to give away Rs 1lk to whoever could guess what it was all about. Since I knew what it was, entered into the contest just to see if I am able to win anything( atleast meet Kapil Dev if not for the cash prize). My submission was not even acknowledged forget any prize, the only thing I got from them were spam emails  asking me to open an account with Samco the last two days.

Considering that there are not many reviews available on the trading platform and considering that they seem to be blowing this prize money out of proportion, I think it is best to avoid. Smells a little like the “Hometrade scam” back in 2002 when cricketers and actors started advertising for Hometrade which eventually collapsed and caused losses of over Rs 600 crores to the investors. 

If you are looking at discount brokers, I’d advise you to choose between Zerodha or RKSV

Empowering Indian retail investors/traders,

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IIFL Rs 9.99 per executed order, just a gimmick?

 

IIFL
GIMMICK?

Fellow Traders and Investors,

I guess you must have read the press coverage about how IIFL is reducing the brokerage to as low as just Rs 9.99 per executed order and how Mr Nirmal Jain has claimed that they can go even lower.

In Economic Times

In Live Mint 

Be very careful, because we think true to its tradition and reputation even this scheme from IIFL is conniving to say the least. Here are the reasons why:

  1. They will be providing you only web based platform, there won’t be any option to use the desktop or the mobile version. If you have to use the desktop or the mobile, you will have to shift to their traditional brokerage plan.
  2. They are having hidden charges in the name of exchange transaction charges. Check this post to know about how brokerages charge extra in the name of turnover charges. India Infoline charges 0.038% or Rs 380 per crore for futures, whereas ideally it should be only around 0.0021% or Rs 210 per crore. Similarly much higher for options (0.058%) and commodity (0.0041%).
  3. No option to place call n trade, you will have to move to their traditional plan if you want to do so.

Click here to see all  other details about India Infoline.

So instead of being penny wise and pound foolish, it is best to avoid IIFL and use one of the reputed discount brokerages out there. Use our website Comparebrokerages, to make the best choice.

 

Empowering Indian retail investors/traders,

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Is it safe trading with Discount brokers who are not registered on exchanges directly?

Fellow Trader and Investors,

With the advent of discount brokerage in India, there are many traditional brokerage houses trying their hand at discount broking in a different brand name. The reason for doing this under a different brand name is quite obvious, this low cost plan doesn’t eat into their existing clientele who would probably be paying a much higher brokerage. The query that I see often, is it safe to trade with such entities?

So here is the list of such brokerages:

  • Compositedge         Composite Investments Private Limited
  • Easy Tradez            Asit C Mehta
  • Rupeeseed              Acumen
  • MyvalueTrade          Mastertrust Capital Services
  • Tradewalla               Berkeley Securities
  • Trade plus                Navia Markets
  • Tradesmartonline     VNS Financials
  • Wisdom Capital        F6 Finserve (Wisdom is the only one on the list who is a different entity, all the others are owned by the parent brand)

The risk of trading in terms of technology or financial risk with such firms is equal to that of directly trading with the parent brand as all the account opening documents will be executed in name of the parent brand. So there is no increase in risk just because you trade with a brand created by the parent company to promote low cost brokerage.

Empowering retail investors and traders,

Comparebrokerages,

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Can I transfer money between equity and commodity account?

Fellow Traders and Investors,

I see many queries online on whether same funds can be used to trade Equity and after 3.30pm be used to trade commodity when trading with the same brokerage firm. There are many brokers who don’t let you do this, but there are a few who let you do this.

I am attaching the SEBI and FMC circulars, which clearly say that a broker is not allowed to transfer funds for a client between equity and commodity accounts. If a person wants to do this, he has to first withdraw the money from equity to his bank account and then transfer it back to the commodity account.

But note that funds which are in your equity account is allowed to be used for both equity and currency trading. It can’t be used for commodity trading.

So if your broker is offering this, beware! He is not being compliant to SEBI/FMC regulations. If he is not compliant to one rule, it is possible that he is not being compliant to other rules as well, which tomorrow might cause harm to the business and in turn affect your trading account with him.

Here is the link to the SEBI circular

Here is the link to FMC circular

25th Dec 2015, SEBI penalizes Greshma Shares and Stocks Limited – Rs 20lks for allowing the same funds to be used for trading equity and commodity. Reiterates everything we had posted earlier. Check this link for the circular. 

2th Jan 2016, SEBI penalizes Anand Rathi for Rs 30 lks for allowing same funds to be used for trading equity and commodity. Check this circular. 

Empowering Indian retail investors/traders

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Tempted by low brokerage advertisements?

Fellow Traders & Investors,

I was just seeing an advertisement on TV of a brokerage (Tradewalla) saying freedom from brokerage, only Rs 20/month or Rs 1950 unlimited/month.

Firstly, ensure that you don’t get carried away by just low cost advertisements, the many you are seeing on TV, google ads, newspapers and more. What you need to ensure is firstly that the brokerage is a financially viable entity, they have good technology backend, have the infrastructure to offer you support and also check for their client reviews, all of which you can see at CompareBrokerages.

Once you are done with your due diligence, ensure to check if the particular brokerage is charging low brokerage and has hidden charges in terms of transaction charges/turnover charges. Do check this blogpost.

We have made it easy for you, following is the list of all the brokerages who charge you less in terms of brokerage, but have big markups in terms of hidden costs. You might think what is the big difference between a transaction charge of 0.055% on options vs 0.08% on options, it could mean you would have to easily pay thousands of rupees extra every month.

1. Easy Tradez

2. Tradewalla

3. Trade Online Plus

4. Trade Smart Online

5. Compositedge

6. SAS Online

7. Wisdom Capital

8. Achiievers

9. Asthatrade

10. My Value Trade

11. Traders Khazana

12. Trade Jini

 

Empowering Indian retail investors/traders

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Lodge your claims against Unicon or Unickon Securities immediately

Fellow Traders & Investors,

uniconbig

As you all must be aware by now, SEBI  has barred Unicon (Unickon) Securities, and all the AP’s (Authorized Persons) and Sub-Brokers. Click here to see the SEBI order. The National Stock Exchange (NSE), Bombay Stock Exchange (BSE), have also expelled Unicon Securities.

The value of total claims pending as on the date of the SEBI order is Rs 11.81 Crores on NSE and Rs 3.02 Crores on BSE.

NSE has today put out a notice in all the leading newspapers to lodge claims, if any (in the prescribed form) against Unicon securities within the next 3 months. Any claim after these 3 months will not be entertained by the exchange. Also the maximum compensation limit per investor if found due and payable out of the investor protection fund is Rs 15 lakhs. Find below the notice, and you can also read the news article here.

Ensure you spread this message amongst your friends who might have been trading with Unicon Securities to lodge their claims immediately with the exchanges.

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NSE Notice on Economic Times on 10th Sept 2014

 

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Stamp duty demystified

Fellow Traders & Investors,

To be very honest, the question of stamp duty is a mystery within the broking community itself. I had spent quite sometime researching on this for a client (brokerage). Will try to explain this in simple English and not use any jargon that our CAs/Lawyers tend to use to confuse us even more.

What is Stamp Duty? 

When we trade the markets a contract note is generated and sent to you by end of the day by the brokerage which shows all the transactions executed for that day. When the contract note is sent to you via courier it is signed physically, and when sent via email it is digitally signed by one of the bosses at the brokerage firm where you trade. When you receive a physical contract note, you will be signing on the courier POD and when you receive an email the log file is saved, both acting as a proof that you have acknowledged all the trades.

Like how you validate a rental agreement by taking signatures of all the parties involved on a stamp paper issued by the state government, similarly the contract note also has to be stamped. How much amount a particular contract note has to be stamped for is called as the “Stamp Duty”. Note that in this case the contract note is not actually stamped physically, but a fee is collected based on your turnover by the brokerage, which is then declared and paid to the relevant stamping authority (state government).

Million dollar question – Which Stamp Authority/State Government? 

This is where all the confusion exists,

The lawyers say: Stamp duty was originally a part of the Indian Service Tax Act, and as per that act a tax is applicable at the point of service. Today most brokerages are online and send contract notes from their servers located at their headoffice, and hence according to them the stamp duty has to be as per the state where their headoffice is. Some of them also say that the point of service should be where the trades happen (the exchanges themselves), which is in Mumbai and hence stamp duty should be collected and paid as per the Mumbai Stamp Act. But the thing about lawyers is that they have a vested interest in saying this, if tomorrow a state government sends a notice to the same brokerage, that will be new business for them.

The exchanges say: All the exchanges maintain silence on this except NCDEX, which has put up a short note on how to pay Stamp Duty on their website. NCDEX says that stamp duty has to be paid state-wise as per the clients’ correspondence address proof.

The state governments say: A few states don’t even have a clue on this, but most of them say that if the client has a residential address proof in their state, the stamp duty has to be paid to them. Lately, many of them have started sending out notices to brokerages who are not paying stamp duty of the clients’ who belong to their state. They cannot calculate what is the exact stamp duty due from a brokerage because they don’t get the state-wise turnover data of clients from the exchanges and have to go with what the brokerage declare, at least for now. Check this, a Google search result showing the letters sent by various state governments to the exchanges asking them to inform brokerages to pay stamp duty for all clients from their state.

State-wise Stamp Duty rates

I think it is just ridiculous that stamp duty rates for trading online are similar to buying property and goods, renting houses, etc. I hope our government wakes up and does something about it. For example, the Tamil Nadu Government today charges more stamp duty than what many of the discount brokerages charge you as a brokerage for offering their services. Some states have a cap on the maximum amount of stamp duty per contract note, and I think all states should be forced to follow this rule. Anyways, find following the stamp duty rates for various states.

Sl No State Amount Of Stamp Duty % Maximum Limit Remarks
1 ANDHRA PRADESH Fifty Paise (Rs.00.50 for
every Rs.10,000/- or part
thereof of the stock or
securities
0.005 Rs.50.00 Article 38
2 ARUNACHAL PRADESH Delivery .04%
Square Up .04% .
F&O .04%
0.04 Rs. 40.00 Article 43
3 ASSAM Ninety Paise (Rs.00.90) for
every Rs.5,000/- or part
thereof of the stock or
securities
0.018 Rs.49.50
4 BIHAR Fifteen rupees (Rs.15.00) for every Rs.1000/- or part thereof of the stock or securities 1.5 Rs.200.00 Article 43
5 DELHI Delivery .01%
Square Up 0.002%
F&O 0.002%
0.01
0.002  0.002
NO LIMIT Article 54A
6 GOA, DAMAN & DIU One Rupee (Rs.1.00) for every Rs.10,000/- or part thereof of the stock or securities 0.01 Rs.50.00 Article 42 consider Article 5
7 GUJRAT Delivery 0.01%
Non-delivery 0.002%
F&O 0.002%
0.01
0.002  0.002
NO LIMIT Article 48A
8 HARYANA Thirty paise (Rs. 00.30 for
every Rs.10,000/- or
thereof of the stock or
securities
0.003 Rs.30.00 Article 43
9 HIMACHAL PRADESH Thirty paise (Rs. 00.30 for
every Rs.10,000/- or
thereof of the stock or
securities
0.003 Rs.30.00 Article 43
10 JAMMU & KASHMIR Sixty paise (Rs.00.60) for
every Rs.2,500/- or part
thereof
0.024 NO LIMIT
11 JHARKHAND Delivery 1.5%
Square Up 1.5%
F&O 1.5%
1.5
1.5
1.5
Rs.200.00
12 KARNATAKA One Rupee (Rs.1.00) for every Rs.10,000/- or part thereof of the stock or securities 0.01 MAXIMUM 50 Article 37
13 KERALA Delivery .01% IT
Square Up 0.002%
F&O 0.002%
0.01
0.002  0.002
NO LIMIT Article 40
14 MADHYA PRADESH also applicable
in CHATTISGARH
One Rupee (Rs.1.00) for every Rs.10,000/- or part thereof of the stock or securitiesF&) 0.002% 0.010.002 NO LIMIT Article 5(ii) 20 b & 41 and Article 43
15 MAHARASHTRA Delivery .01%
Square Up 0.002%
F&O 0.002%
0.01
0.002  0.002
NO LIMIT Article 51 (A)
16 MEGHALAYA Two Rupee (Rs.2.00) for every Rs.5,000/- or part thereof of the value of the stock or securities 0.04 Rs.40.00
17 NAGALAND Two Rupee (Rs.2.00) for every Rs.5,000/- or part thereof of the value of the stock or securities 0.04 Rs.100.00 Article 43
18 ORISSA Fifty Paise (Rs.00.50 for
every Rs.10,000/- or part
thereof of the stock or
securities
0.005 Rs.50.00 Article 43
19 PUNJAB Five Rupee (Rs.5.00) for every
Rs.10,000/- or part thereof of
the stock or securities
0.05 Article 43
20 RAJASTHAN Delivery .01%
Square Up 0.002%
F&O 0.002%
0.01
0.002  0.002
NO LIMIT Article 5A,Article 40 Page 2097
21 TAMIL NADU Delivery .006%
Square Up 0.006%
F&O 0.006%
0.006 NO LIMIT Article 5 C (i)
22 UTTAR PRADESH Delivery .02%
Square Up 0.02%
F&O 0.02%
0.002
0.002 0.002
Rs.1000.00 Article 43
23 UTTARAKHAND Delivery .002%
Square Up 0.002%
F&O 0.002%
0.02 Rs. 1000.00
24 WEST BENGAL Fifty Paise (Rs.00.50 for
every Rs.5,000/- or part
thereof of the stock or
securities
0.01 NO LIMIT Article 43

Important to know

  • I think the safest bet for a brokerage is to charge and pay stamp duty as per the correspondence address proof of a particular client. What you need to know as a client/trader is that the onus of paying the correct stamp duty is on the brokerage and not you. So if tomorrow, a state government sends a demand notice to a brokerage, they cannot come back to you and ask money retrospectively. If this does happen, you can complain to the exchanges/regulators.
  • There are brokerages today that charge as per the state where their head office is and those who charge as per the state where you reside. If you are trading with full-service brokerages that charge 0.01/0.1% to 0.05/0.5% , or with pedigree brokerages like the ICICIs/HDFCs/Reliances of the world, it doesn’t matter even if they collect stamp duty as per the location of their head office. Why? Let us assume that one of the big brokerages get a demand notice from your state tomorrow, they will definitely be able to make good any differential stamp duty as they would have charged you so much more in terms of brokerage. They will also have the muscle power to fight it out with the state governments if need be. But if you are trading with a discount broker whose margins are very slim, or who doesn’t really have the expertise to handle a litigation, an incident like this can even lead to the brokerage having to shut shop. Why? Because a discount broker won’t be able to make up for the differential stamp duty as the profit margins are very small.
  • I’ve read on a few online forums about how brokerages can charge you stamp duty and pocket it for themselves. To clarify, this cannot happen, and if it does it is a serious offence which can lead to imprisonment of the directors at the brokerage. A few brokerages, when there is no clarity on whom to pay the stamp duty (for a few states), keep this stamp duty in a suspense account. Even the interest accumulated on this amount is added back to the suspense account, so don’t believe in such conspiracy theories.

So my advice is – if you are trading with discount brokerages (whose margins are wafer thin), it is safer to go with those who charge stamp duty as per the state where you reside. And if you are trading with a full-service brokerage (who has super fat margins), it shouldn’t matter if he is charging as per the state you reside or where his headoffice is.

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The mystery behind Transaction/Turnover/Other charges by Indian Brokerages

Fellow Traders & Investors,

If you visit comparebrokerages and check out “Turnover charges” under the heading “Transparency and other costs”, you will realize that these charges vary between brokerages. Have you ever wondered why the difference? Or have you never ever seen this charge on your contract note? Have you looked at your contract note in the first place, most traders don’t, have you?

Are you paying extra as transaction charges that you are not aware of? 

Find below a comparison table, and see how the turnover charges seem to be different. Turnover charge is something a brokerage charges over and above the brokerage charges.

compare2

 

Some things you need to know: To become a brokerage on the exchanges, you have 4 kinds of memberships: Trading membership,Trading cum self-clearing membership, Trading cum clearing membership, and Professional clearing membership.

Trading member: A Trading member is one who can trade on his own account (self) and can have his own clients trading through him on the Exchange.

Professional Clearing member:  This category of membership allows the member to clear and settle trades of such members of the Exchange who have chosen to clear and settle their trades through this member.

Clearing & Settlement is the process of identifying the payable/receivable by each trading member of the Exchange and then making an actual settlement of such payable/receivables.

Clearing fees: The trend over the last few years of obtaining membership at Exchanges has been that of becoming only a Trading member and then utilizing the clearing services of a Professional clearing member. This is quite logical in the sense that it reduces the risk and the operational costs of a trading member along with the necessity to maintain a higher amount of net worth as desired by the Exchanges for a clearing member. The Professional clearing member charges a certain amount of fee for offering this clearing and settlement service and this is labelled “clearing fee”.

Exchange Transaction charges: If you are wondering how the Exchanges (NSE, BSE, etc.) earn revenues, it is by way of levying ‘Transaction Charges’. Transaction charges are collected by the Exchange from the Trading member, who in turn collects it from his clients for the trades executed by such clients. Exchange transaction charges are the same for every brokerage.

Here’s some interesting trivia for you. Did you know that NSE is the most profitable Indian company in terms of number of people employed to profits made? NSE’s profit for the year 2013-14 was a whopping 1000 crores!

Brokerage: This charge is charged by your broker and it is very likely that you would have been informed of such a charge at the time of your account opening.

Most traditional brokerage firms don’t share details of any of the charges on their website, but there is breath of fresh air with the new age ones being completely transparent about their trading costs by displaying them prominently on their website.

To summarize,

Transaction/Turnover/Other Charges = Exchange Transaction Charges + Clearing Fees

Brokerages which clear their own trades (Trading cum self-clearing members) are not allowed to have any clearing fees. For example, most banks who are brokerages clear their own trades, and hence you will find that their transaction charges are basically just what the exchanges charge. Check the image above for HDFC Securities. You will also see that Unicon securities charged quite a bit more, practices like these lead to Unicon having to shut shop.

Brokerages have gotten away by charging you excessively in the name of clearing fee. In reality, the clearing fee that the brokerage firm would be paying to the clearing member would be way lower than what he is collecting from you in the name of clearing fee. You may be under the assumption that you have gotten yourself a very good deal with the broker charging you low brokerage but they might be charging  higher ‘Transaction charges’.

Here is what we think should be the ideal range for charging clearing fee. This range has been arrived at after having worked with a professional clearing member. Ideally, you would want your broker to be in the lower half of this range.

compare3

 

Light at the end of the tunnel? 

SEBI, the regulator for the Indian financial markets identified this practice followed by brokers and has taken corrective measures by way of a regulation which stipulates that all brokerage firms are now required to charge only as much clearing fee that they are paying to the clearing member and not charge any random arbitrary inflated number. This along with the new Common contract note regulation is applicable from August 1, 2014. You can find details of the circular issued by NSE  here.

So, if you now find the total transaction charges you are paying to your broker to be more than the sum of Exchange charges and Clearing charges as mentioned in the table above, you can complain to the Exchanges giving details of the same and you can rest assured that these charges will be reduced. This regulation, thanks to the Exchanges and SEBI gives more power to the retail investor and trader on the Indian capital markets.

Empowering Indian retail investors/traders,
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