Friday, November 28, 2014

NSE cuts trading fees for select segments

 To make it cheaper for investors to trade on its platform, NSE, the country's largest stock exchange by turnover, on Thursday cut charges for trading on its currency derivatives platform and equity options segment by up to 40%. The bourse also introduced liquidity enhancement schemes, an incentive process for brokers to bring in higher volumes, for these two segments.

Market players pointed out that NSE's decision to cut charges came at a time when BSE, its only competitor and the country's oldest exchange, is gaining market share at a faster clip after it rolled out a new trading technology in the last one year.

Under the revised structure, NSE will charge about Rs 3,000 for every Rs 1 crore worth of premium in the equity options segment, down from Rs 5,000 earlier. In the currency derivatives segment, it will charge Rs 110 per Rs 1 crore worth of trades, NSE circulars showed.

Market sources said the cut in transaction charges on NSE is expected to bring in more participants since at higher charges traders were finding it difficult to recover their costs. "In a business (like broking) where margins are wafer thin, cost levied by an exchange is often the determining factor," said a market analyst. NSE said that the revised charges were being rolled out on a pilot basis.

NSE cuts trading fees for select segments

On a comparative basis, however, even the reduced trading charges on NSE are much higher than BSE's. In the equity options segment, BSE charges Rs 50 per Rs 1 crore of premium. Here again, while NSE charges on both sides of the trade, that is for buying as well as selling, BSE charges are only for the sell side. In the currency derivatives segment, BSE charges Rs 2 per Rs 1 crore worth of trade.

In the past few months, BSE's currency derivatives segment, which was launched just about a year ago, is clocking volumes that are around 50% of NSE's. On Thursday, turnover for this segment on BSE was Rs 4,343 crore, compared to NSE's Rs 7,122 crore.

In the equity options segment, however, NSE remained much ahead of BSE. On Thursday, NSE clocked a turnover of Rs 16,992 crore, compared to BSE's Rs 1,141 crore. BSE's equity derivatives segment, after remaining dormant for several years, is gaining traction since it launched the new technology platform in February this year, sources said.

Sourced from TOI

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