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SC upholds SEBI registration fee on brokers

In a major judgement that will affect big stock brokers, the Supreme Court on Thursday upheld the registration fee charged from brokers by Securities and Exchange Board of India. This will enhance the income of the regulatory body substantially.

The fee set at 0.01 per cent of a broker's daily turnover was challenged by a group of brokers. It has already collected Rs 490 million as registration fee from brokers alone and another Rs 790 million from other intermediaries.

The verdict pulled the Sensex down. At 1 p.m., the index was down 68 points at 4259 points.

"A division bench ...pronounced the judgement this morning and we are expecting further details by the afternoon," the SEBI official said.

Dismissing a petition by Bombay Stock Exchange Brokers' Forum challenging the SEBI decision, a three-judge Bench comprising Justice B N Kirpal, Justice N Santosh Hegde and Justice Brijesh Kumar said that SEBI had the necessary legislative competence to impose the said fee.

The Supreme Court accepted the contention of Additional Solicitor General Kirit Raval, who appeared for SEBI, that a large number of activities were being carried out by SEBI and hence the fee charges was not merely for registration of a broker but also for performance of its regulatory functions.

Forum's counsel P Chidamabaram had contended that SEBI had exceeded its powers by linking the fee to the turnover of a broker for five year post-grant of registration.

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