Financial Daily from THE HINDU group of publications
Thursday, Nov 21, 2002
Financial Daily from THE HINDU group of publications Thursday, Nov 21, 2002 |
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Markets
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Stock Exchanges Stand-off with SEBI drags on — Brokers take turnover fee issue to Ministry Jayanta Mallick
KOLKATA, Nov. 20 THE Securities Industry Association of India (SISAI), the apex body of the broking community in the country, has finally moved the Union Ministry of Finance on the issue of turnover fee. Brokers all over the country have been unable to sort out the problem with the Securities and Exchange Board of India (SEBI) for nearly two years now. In its representation, SISAI has urged the Ministry that the market regulator should fix the quantum of the fee, to be paid by the brokers to it, in relation to the prevailing rate of brokerage and waive the interest claim. The association argued that since the Supreme Court in its judgement in January 2001 on the issue of turnover fee had stressed on the reasonableness of the fee and did not mention about the interest on the fee arrears, SEBI should be flexible enough to take into account the ground realities while arriving at the final figure. The turnover fee issue has gained in significance as SEBI has linked clearance of dues on this count to a broker's access to a bourse through membership and access to derivatives trading even as a sub-broker. Ms Deena Mehta, the National Convener of SISAI told Business Line that the R S Bhatt Committee in its report in 1992 had recommended a fee 0.01 per cent on the basis of then ruling brokerage rate of 1 per cent. "The brokerage now hovers between 0.04 and 0.05 per cent in square off businesses and ranges from 0.15 to 0.50 per cent for delivery trades. Hence, instead of going by a flat percentage, the brokers may pay 1 per cent of their income. In case of brokers, who do proprietary trading, a fee of 0.001 per cent or Rs 100 per Rs 1 crore income may be collected as fee," she explained. "The IT department's assessed income should be treated as authentic figures on brokerage," Ms Mehta added. On the issue of interest on arrears, the SISAI argument is that the arrears were built up primarily because the brokers waited for years to get justice and reasonable settlement," Ms Mehta observed. A team of SISAI top brass met the Union Finance Secretary, as also the deputy secretary in charge of the capital markets last week. This representation follows an informal discussion with the Union Finance Minister on the subject, when he was in Mumbai early this month.
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