The Securities and Exchange Board of India (Sebi) has asked stock exchanges to provide member-wise turnover figures with bifurcation on turnover components such as jobbing, off-market transactions and deals in public sector/government securities.
The stock exchanges, in turn, have asked members to provide break-up of turnover as bourses only keep gross turnover figures. In case of jobbing transactions, the members are required to get the turnover figures duly certified by a qualified auditor as defined under Section 226 of the Companies Act, 1956.
The Sebi dictate follows the Supreme Court verdict in favour of it on the registration fee linked to the annual turnover recommended by the Bhatt Committee.
The brokers' community had challenged the Sebi move to implement the R S Bhatt Committee recommendation on registration fee as they find turnover-linked registration fee too high as brokerage rates have slipped drastically.
Broker have been insisting Sebi that the turnover fees to be reduced proportionately. The Bhatt Committee had recommended a turnover fee of one per cent (which is 0.01 per cent) of the gross turnover. Brokerage rates have dipped from one per cent in 1992 to the current level 0.10 per cent, while the combined the turnover on the National Stock Exchange and Bombay Stock Exchange has increased from Rs 330 crore in 1991-92 to Rs 10,000 crore at present.
Ever since the Supreme Court verdict, Sebi has been acting tough with brokers and had stopped issuing membership in the derivative segment for those who are yet to clear turnover fee arrears.
"Several brokers who started business after 1997 are finding it difficult to pay turnover fee as they have been the most hit. In fact, the drastic rise in turnover on the bourses is mainly attributed to the expansion and automation taken by these new breed of brokers," a broker said.
Another worrying factor for the brokers is the turnover from the jobbing business. Jobbing is those transactions which are squared off during the day and have not been undertaken on behalf of clients. The Bhatt Committee had suggested to consider only the sale side for calculating jobbing turnover.
"It needs to highlight that the nature of the business has changed drastically after the implementation of screen-based trading and the definition of jobbing has changed with clients taking huge positions and squaring off the same day," the broker said.
