BSE Woos Big Traders With Revised Transaction Fee

BSE Ltd. has revised its transaction charges to lure large traders as the Asia’s oldest stock exchange looks to boost volumes to compete with its bigger rival National Stock Exchange Ltd.

From April 3, the BSE will charge for every equity trade, it said in a notice on Thursday. The fee starts at Re 1 per trade for up to 5 lakh monthly transactions, and comes down as the number of trades rise. Earlier, it charged a flat Rs 275 for a gross turnover of Rs 1 crore. That compared with Rs 325 for every Rs 1 crore turnover at the NSE, according to the exchange’s website.

An NSE spokesperson declined to comment on the BSE transaction charges when contacted.

The BSE’s move is aimed at attracting more block and bulk deals, said Sandeep Nayak, chief executive officer and executive director of brokerage Centrum Broking. This may help the BSE capture some of the NSE’s market share, but is unlikely to improve the overall market volumes, he said.

The average daily equity turnover at the BSE was one-seventh of the NSE’s Rs 25,000 crore in February, according to data on their websites.

This is an attempt by the BSE to increase its trading volumes, said Deena Mehta, one of the first women members of the stock exchange, who manages Asit C Mehta Investments. The move will promote competition and also weed out investors who are not serious and punch in orders for the heck of it, she said.

Clearing Arm To Pay Interest

BSE’s subsidiary Indian Clearing Corporation Ltd. (ICCL), which clears and settles trades for the exchange, will charge Re 0.01 per trade in the equity cash, equity derivatives and currency derivatives segments, a separate notice said.

ICCL will, however, pay a yearly interest of 4 percent on cash deposits maintained with the clearing house in the equity derivatives and currency derivatives segments.

Small Traders To Feel Pinch?

The new transaction charge that comes down with the number of trades is likely to impact smaller trades, according to Dipan Mehta, a member of the BSE. Traders will start migrating to competitor NSE in search of a better deal and may impact the BSE negatively, Mehta told BloombergQuint over the phone.

Nayak of Centrum sees a marginal impact on retail investments.

BSE went public recently and rival NSE has filed the prospectus to raise Rs 10,000 crore by selling a 25 percent stake through an initial public offering.