Gujarat-based regional stock exchange, Vadodara Stock Exchange (VSE) has increased the transaction charges for depository participants (DPs) by over 300 per cent from this month onwards.
The move is facing widespread opposition from broker forum, who has written to the exchange management to reconsider the steep hike in the transaction charges.
The DP transaction charges have been hiked from Rs 6 earlier to Rs 25 per transaction of Rs one lakh effective from March 1, 2013 for trading members. VSE broker forum has strongly opposed the steep hike in charges.
According to broker forum, VSE management had arbitrarily increased the DP transaction charges, which would hamper the business prospects. "VSE clearing house has been making huge profits every year, therefore such steep hike is unjustified," stated a trading member of VSE.
Further brokers believe that by hiking transaction charges, VSE has created a challenge for itself. "Most of the organised broking houses in surrounding provide free DP services. A hike in transaction charge will hamper the business prospects for the members of the exchange," said a VSE member.
In their representation, brokers suggested a 3-layered transaction charge schedule. "It is in mutual interest (of members and the exchange) that the transaction charges remain unchanged for trading members. For those customers who are patronizing VSSL, the same be kept at Rs 15 and for those, who merely have only DP account and work with broking house other than VSSL may be charged with Rs 25."
"We have received their recommendations in writing. They have objected to a sharp rise in charges. The board of directors will take up this matter in its next board meeting and some solution will come," said Samir Joshi, chairman of VSE.
However, Joshi also stated that in spite of steep hike in DP transaction charges, the same still remains almost at par or lower as compared to other regional stock exchanges in India. "Inflationary situation across the country has caused our operational costs to rise. This necessitated the revision in the existing DP transaction charges, which had been the lowest in among other RSEs," he said. "VSE Clearing House had recently introduced a life-time asset management company and most of the trading members and their clients availed the benefit I the good faith believing that VSE clearing house shall keep the transaction charges unchanged," said Vishnubhai Patel, a broker and former director on VSE board.
