Comexes told to charge fee on incremental turnover

The Forward Markets Commission (FMC) has directed national commodity exchanges to impose differential transaction charges on their members based on incremental turnover instead of the current practice of taking the entire turnover into account.

The FMC directive, effective April 1, is aimed at avoiding unhealthy competition among commodity exchanges engaged in providing incentives to their members to attract more volumes and turnover. The commodity regulator's move is also an attempt to streamline the sops offered by commodity bourses.

The FMC has given national exchanges a free hand to define the differential slabs of turnover with respect to transaction charges, making it mandatory to base the concessions on the incremental turnover rather than the total turnover.

While national commodity exchanges such as MCX, NCDEX and NMCE, denied any differential treatment in membership fees, they contended that such practices were going on.

"The FMC has notified that national exchanges are incentivising their members based on their turnover. The regulator has, therefore, directed the exchanges to provide incentives only on an incremental basis and not on the overall turnover," said Anupam Mishra, director, FMC.

Poonam Gupta, vice-president, business development, NMCE, said the exchange had revised the transaction charges recently and had adopted a slab system, charging fees from brokers based on the respective slabs of turnover fixed by the exchange.

The highest fee was Rs 4 for every Rs 1 lakh charged for members generating a turnover of up to Rs 20 crore. Members generating revenues between Rs 20 crore and Rs 100 crore attracted a fee of Rs 3 for every Rs 1 lakh, while it was Rs 2 for every Rs 1 lakh for turnover between Rs 100-200 crore and Re 1 for every Rs 1 lakh for members whose turnover exceeded Rs 200 crore, said Gupta.

The NMCE, in an email reply, claimed that the turnover fee was charged only on the incremental volume.

Traders generating higher volume were treated differently in spot market too and this could not be termed as a "war for volumes" among commodity exchanges, she added.

The exchange incentivised members in a transparent and uniform manner with prior notice. But, this could not be termed as an unhealthy competition to grab the volumes, added an NCDEX official.

Some exchanges were offering more incentives to their members. Besides, members were also incentivised by a waiver of all transaction charges if they traded in precious metals. Hence, the FMC action was a welcome move, which would streamline the incentives for all, said an MCX spokeperson.