Transaction charges include NSE turnover charge and something called clearing charge.. The only big broker who is charging 0.05% is Icici direct and you know why... everyone else from indiabulls to sharekhan, from way2wealth to bma wealth creators charge anywhere between 0.06% to 0.1% as transaction charge, if not under one head than under separate heads.. There is something called a clearing charge associated when you are clearing f&o trades and we are not hiding it.. The clearing charge goes to clear the trades and it keeps reducing for the broker as the volume keeps increasing.. The reason we haven't included it in the brokerage is because as and when our volumes keep going up we will keep reducing it towards 0.06%(the min we will be able to get to )...
I will now tell you the real difference: Assuming you are trading an option of nfity which is at Rs 100. Buying 1 lot the volume is Rs 5000(transaction charge is on the premium and not the turnover), 0.03% of Rs 5000 is Rs 1.5 ... That is how much difference it will make per lot that you trade....
In brief, there is a clearing cost for every broker and it is perfectly legal to charge it as a transaction charge..90% of brokers do it today, if not under transaction charge then as some other charge..There is nothing to hide because we tell this when we open an account and actually give it on a spread sheet..
What is the real difference?? 1.5Rs for 1 lot of nifty option trading at Rs 100.. Hope this clarifies..
Cheers.. Sachin..
Hello Mr. Sachin,
Till your before posting I was like your anwers and quarries solutions but now you has given a totally wrong picture because the
calculation give by you is not the reality because you has given ONE lot nifty buy exampal. In real thing I think averege trader with you will buy:
10 lots Nifty (500) @ 100 = Rs. 50,000 so Rs. 50,000 x 0.03% (extra clearing charge) =
Rs. 15 per order extra
15 lots Nifty (750) @ 100 = Rs. 75,000 so Rs. 75,000 x 0.03% (extra clearing charge) =
Rs. 22.50 per order extra
20 lots Nifty (1000) @ 100 = Rs. 1,00,000 so Rs. 1,00,000 x 0.03% (extra clearing charge) =
Rs. 30 per order extra
Average Extra charge for clearing of above three tradings is
Rs. 22.50.
So in my above postings I has given approximet extra charge of Rs. 20 per order.
So when one order is exeucted the charge with your brokerage is more then Rs. 40/order and not Rs. 20 / order (your basic brokerage)
For your information, Reliance Money, Angel Broking, Bajaj Capital, Ventura are charge on 0.05% only so I think all other also cannot charge more than what is legal allow charge by the NSE exchange.
What is also surprise me is at one time you are say that you are not benchmark any broker in the India and now you are saying that all other broker is charging it. So this is not correct thing. Now if you are compare your shelf with other brokers only then you should also charge clearing charges of 0.03% under other heads so you also should put separate headings, one for Transaction Charge 0.05% (which is also mention on NSE letters) and second as Other charges 0.03%. If you think that your want to less this charge because of more business then you can less other charge to 0.02% or 0.01%.
But I think it you are really tranparent in dealings than you should only show govt tax (STT, Service Tax, Stamp Tax) and NSE exchane charge (Transaction Charge 0.05%) only in the Contract Note. All other charge you pay to any other person (and Not Govt and NSE Exchange) has to in your brokerage what before mentioned brokers are doing.
Thank you.