BSE cuts transaction rates to woo dealers
06 Oct 2009
Following on the heels of the National Stock Exchange reducing transaction charges for its members, its arch rival Bombay Stock Exchange has announced a differential pricing structure for its broker-members, while cutting transaction fees in the cash segment.
Under the new structure for the cash equity segment which will be effective from Wednesday, for passive orders, which are the orders already existing in the order book at the time of trade matching, BSE has reduced the transaction charges from Rs3.50 per Rs1,00,000 to Rs2.25 per Rs1,00,000 of gross turnover.
For active orders that are matched against the passive orders at the time of trade matching, the transaction charge has been reduced from Rs3.50 per Rs 1,00,000 to Rs3.25 per Rs1,00,000 of gross turnover.
The aim is to primarily boost trading volumes on the bourse without entering into a price war with arch rival and India's largest bourse, the NSE. The BSE has been steadily losing market share in the cash segment, trapped in a vicious circle of shrinking liquidity and consequently lower investor participation.
Madhu Kannan, managing director and chief executive officer of the BSE, said, ''With the new pricing framework coming in to place, we are expecting to have more order flow from Indian and international investors. This also shows our commitment to the members that we will continue to strive to provide the most efficient trading platform while bringing down the cost of transactions considerably.''
For financial year 2008-09, income from trading members accounted for less than 30 per cent of BSE's total income of Rs421.09 crore. Almost 53 per cent of the income came from investments and deposits. For the first quarter of the current financial year, the trend has not been much different.
Income from trading members accounted for around 33 per cent of the total, while over 50 per cent came from investments and deposits.
In comparison, transaction fees alone accounted for nearly 56 per cent of NSE's income of Rs1,024 crore for FY09, down from 72 per cent the previous year.