The economics of using the Straight Through Processing (STP) gateway offered by National Securities Depository Ltd (NSDL) might prove a bit more costly for market participants compared with what is charged by the other vendors.
Unlike the two other major vendors - NSE.IT and Financial Technologies (FT) - NSDL has a flat rate as well as a variable rate of 5 paise per trade. The others charge just a flat rate. The key issue is in cost per message.
FT does not levy any annual fee or even a one-time fee. The usage fee for sending unlimited messages on a yearly basis is Rs 2 lakh while for digital certificates the company charges Rs 1,500 per year per certificate.
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The usage fees is Rs 7 per message. In case of NSE.IT, there is an annual fee of Rs 5,000, the usage fee is same as that of FT, while it charges Rs 2,500 per year per digital certificate. The usage fee is Rs 7.50 per message and it also levies Rs 4,000 on USB Port Smart Card key.
However, NSDL charges an usage fee of Rs 10 per message and 5 paise per trade, which changes the entire costing drastically.
This can be illustrated with the following example - an institution can place an order to buy 50,000 shares of Reliance. This could theoretically result in 50,000 trades, but since this seems unlikely, let us take a more probable figure of 500 trades.
That makes it Rs 25 (500*0.05) plus the Rs 10 charged by it - that is Rs 35 per message. The fee levied by others are much less in comparison at Rs 7 and Rs 7.50 per message. This means that the fees charged by NSDL is five times more expensive than those of the others.
A cash call?