NEW DELHI: Shares of stock broking firms declined sharply on Tuesday, following a directive from the Securities and Exchange Board of India (SEBI) mandating a uniform and equal charge structure for all members of stock exchanges and other market infrastructure institutions (MIIs), rather than varying charges based on their volume or activity.
The stock of Angel One tumbled 10.50%, Geojit Financial Services tanked 5.86%, Dolat Algotech dropped 5.39%, 5paisa Capital declined 4.51%, Motilal Oswal Financial Services went lower by 3.70%, and SMC Global Securities dipped 2.41% on the BSE.
SEBI's directive, issued in a circular on Monday, instructed stock exchanges, clearing corporations, and depositories constituted as MIIs to ensure that any charges recovered from the end client are "True to Label." This means that if a certain charge is levied on the end client by members including stock brokers, depository participants, and clearing members MIIs must ensure that the same amount is received by them.
"To begin with, the new charge structure designed by MIIs should give due consideration to the existing per unit charges realized by MIIs, so that the end clients benefit from the reduction of charges," SEBI stated.
The regulator has asked MIIs to comply with these additional principles while designing the processes for charges levied on their members, which are to be recovered from the end clients. MIIs, being public utility institutions, act as first-level regulators and are entrusted with the responsibility of providing equal, unrestricted, transparent, and fair access to all market participants.