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Vivek Law
Mumbai, Nov 9: The National Stock Exchange (NSE) will sharply cut its transaction charges, paring them down to up to half. Normal transactions, negotiated trades and deals done through the depository segment will thus attract reduced charges.
The revised charges will be effective from December 1. For normal transactions, the exchange has decided to slash charges on a graded basis, bringing them down to 0.004 per cent from the current levels of 0.009 per cent for trades worth more than Rs 600 crore in a month.
For the dematerialised segment, transaction charges have been slashed to 0.004 per cent for all trades, compared with the current 0.005 per cent.For negotiated trades that are not guaranteed by NSE's clearing corporation, transaction charges have been cut to 0.003 per cent.NSE managing director RH Patil said the move was aimed at slashing investors' costs further. "By bringing down charges, we hope to see more investors, especially high net-worth ones, trading on the exchange.We want to encouragemore and more members to trade higher values. We are removing hurdles to do this in the form of steep transaction charges. Leading institutions and large brokers will benefit enormously".For normal transactions, the graded structure of charges will workout like this: For transactions up to Rs 50 crore a month, brokers will continue to pay the current 0.009 per cent, which will be brought down to 0.008 per cent for trades between Rs 50 crore and Rs 100 crore.
Between Rs 100 crore and Rs 200 crore, the charge will be 0.007 per cent. From Rs 200 crore to Rs 400 crore, it will be 0.006 per cent, which will come down to 0.005 per cent, if trades are between the Rs 400 crore and Rs 600 crore.
For trades above Rs 600 crore a month, transaction charges will be 0.004 per cent.
"If a member has traded Rs 250 crore in a month, then he would pay a transaction charge of Rs 1.85 lakh at 0.009 per cent for the first Rs 50 crore, 0.008 per cent for the next Rs 50 crore, 0.007 per cent for the next Rs 100 crore and0.006 per cent for the balance Rs 50 crore," says an exchange circular.
There will be no graded structure for the depository segment where transaction charges have been brought down by 0.001 per cent across the board. A flat rate of 0.003 per cent has also been put in place for negotiated deals. INSIGHTÎA long-drawn criticism of the National Stock Exchange is finally being addressed, sharpening the edge it has over other bourses. The exchange has already a deeper market with tighter spreads than any other bourse in the country, and, in fact, competition has been instrumental in driving down transaction costs on securities trading. This obviously makes for an increase in market efficiency. The reduction in transaction costs will greatly benefit large institutional investors, which are known to be very sensitive to costs, but benefits will also accrue to small investors, opting for the paperless route.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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