Stock broking firms saw a decline in their shares on Tuesday, following a directive from the Securities and Exchange Board of India (Sebi). Sebi has instructed stock exchanges and other market infrastructure institutions (MIIs) to enforce a uniform and equal charge structure for all members, rather than having varying charges based on their volume or activity.
Angel One’s stock dropped by 10.50%, Geojit Financial Services fell by 5.86%, Dolat Algotech declined by 5.39%, 5paisa Capital saw a decrease of 4.51%, Motilal Oswal Financial Services went lower by 3.70%, and SMC Global Securities dipped by 2.41% on the BSE.
The directive calls for stock exchanges, clearing corporations, and depositories to ensure that any charges collected from the end client are ‘True to Label’. This means that any charge imposed on the end client by members (stock brokers, depository participants, clearing members) should be the same amount that is received by the MIIs.
Sebi stated in a circular on Monday that the new charge structure designed by MIIs should consider the existing per unit charges realized by MIIs, with the aim of benefiting end-clients from reduced charges.
The regulator has asked MIIs to adhere to these additional principles when designing processes for charges levied on their members, which are to be recovered from the end-clients. MIIs, as public utility institutions, act as first-level regulators and are responsible for providing equal, unrestricted, transparent, and fair access to all market participants.