SEBI’s New Levy Order to Impact Discount Brokers’ Earnings by Rs 2,000 Crore and Affect Client Base

ET Bureau

The Securities and Exchange Board of India (SEBI) has issued a new regulatory order that could significantly reduce the income of discount brokers by over ₹2,000 crore. This order mandates stock exchanges to collect uniform levies, which will particularly impact discount brokerage platforms and disrupt popular zero-brokerage plans. As a result, shares of several brokerage firms dropped by nearly 9% on Tuesday.

Starting October 1, SEBI has instructed market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations, and depositories to treat all clients equally, regardless of their trading volumes. Nithin Kamath, the founder and CEO of Zerodha, mentioned that this new rule might force them to abandon the zero-brokerage model or increase brokerage fees for futures and options (F&O) trades.

Previously, MIIs charged brokers a flat rate based on their turnover, which was ₹3.25 per lakh of trades up to a turnover of ₹1,250 crore in cash markets. The charges would decrease with higher trading volumes, benefiting large brokers who could earn additional income by charging investors a flat base rate of ₹3.25 per lakh. Jimeet Modi, CEO of Samco Securities, explained that these volume-based discounts were advantageous for large brokers.

Following SEBI’s announcement, shares of Angel One, the biggest loser among listed brokerage firms, fell by 8.6%. Other firms like IIFL Securities, Emkay Global Financial Services, and Geojit Financial Services saw their shares drop between 3% and 7%.