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June 8, 2001
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Money > Business Headlines > Report June 8, 2001 |
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No fresh licences for defaulting brokersRakesh P Sharma & Ashwin J Punnen The Securities and Exchange Board of India is getting tough in retrieving its dues from brokers. The market regulator has taken indirect means to make brokers pay up the turnover tax. According to sources, Sebi is not issuing any fresh licenses for derivative trading to brokers who are yet to clear the dues. Interestingly, Sebi is also not clearing any other proposals, including increasing the base capital or changing the constitution of the company, from the brokers who has yet to pay turnover tax. But Sebi's tough attitude with the broking community is affecting a number brokers, who are already going through a bad phase with sinking business volumes and high cost operations. Of late, several brokers have shown a keen interest in taking license for trade in derivatives, following the ban on carry-forward products from July 2 and the launch of new derivative products such as index option. Sebi's registration fees based on turnover also is hitting a number of new brokers who have entered the profession after 1997 as trading volumes have risen sharply since then. In the past 3-4 years, trading volumes have touched a high of more than Rs 50 billion, compared with a mere Rs 3-4 billion in the prior period. It is estimated that the liability of brokers who entered the profession after 1997 to be in the region of Rs 25 million per broker, based on the Bhatt Committee recommendations, of 0.05 per cent of the turnover. Ironically, brokerage rates have dipped to as low of 0.05 per cent. Brokers said the registration fees in respect of new brokers work out to around 25 per cent of the income based. Leading brokers said the rise in volume on the stock exchange is mainly on account of expansion of new brokers who have invested heavily in technology and they ask why they should be punished with higher registration fees. Brokers are making a representation to Sebi for pruning the tax amount as it acts as a deterrent. They argue that the markets regulator has heavily relied on the Bhatt Committee report, which had relied on the parameter that a brokerage is charged at the rate of one per cent of the total value of transaction. But brokerage rates are now as low as 0.05 per cent. Powered by YOU MAY ALSO WANT TO READ:
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