Mumbai: The BSE Brokers Forum is perplexed over a new cap on commission set by Sebi as the circular was not clear whether the 0.12 per cent cap is exclusive of the other statutory charges that they have to pay like service tax etc. “These charges come to around 60-70 per cent of the commission of 12 paise,” said Alok Churiwala, vice-president of the BSE Brokers Forum.
Speaking to this newspaper, Mr Churiwala said “We can charge a commission of 12 paise on institutional trades and on other trades this varies from 0.25-0.30 per cent depending on the volumes.” They now have written to the Securities and Exchange Board of India asking whether the commission paid by the mutual fund houses to the brokers of 0.12 per cent is exclusive of statutory charges.
Mr Churiwala said brokers are already suffering due to lack of volumes declining, the number of investors falling and if they have to shell out the statutory from their pocket, it would kill them financially. What a brokers earns is purely his brokerage. Other levies are statutory and are required to be collected and paid by the broker. Non collection simply hits bottom-line of brokers’ commission, as he has to pay from his pocket, said Mr Churiwala.
The letter addressed by Siddharth Shah, president of the BSE Brokers Forum to the capital market regulator, states, “There has been lot of confusion regarding the interpretation of the 12 basis points ceiling. The fund houses are interpreting that the ceiling is along with all the statutory charges that is service tax and other applicable taxes.” The letter said further, “The inclusion of service tax in the 12 basis point brokerage is killing the industry as the margins are wafer thin and from June 1, the rise of 50 basis points in service tax will further dent the margins.”
