Special fees likely for CSE brokers holding sub-brokerage at NSE

Jaidev Majumdar

Kolkata, Jan 1: Calcutta Stock Exchange brokers who have taken up sub-brokerage at the National Stock Exchange platform may have to pay brokerage fees to the NSE in addition to the commission system.

The NSE brokers have notified their CSE sub-brokers to file detailed format of a ‘constituent registration form’ specifying details of their property, amount of cash margin they pay to the member, their bank guarantee etc.

The sub-brokers here say it is a precursor to an additional amount they will now have to pay. Although the new NSE regulation for futures and options services is seen as a move that will ensure security in trading, brokers here hope that it will not make a hole in their pockets.

"We will only know what to pay once we fill in the form. It
has just reached us. We only hope its not too high after all that
we went through in the last couple of months," a CSE broker said.

Since the March 2001 payments crisis, turnover on the CSE had reached a rockbottom. In October, the third largest bourse in the country clocked an average turnover of Rs 60 crore a day. Things have improved since then, with the turnover close to Rs 130 crore a day, as of now.

Half the CSE brokers had opted for trading in bigger platforms like the BSE and NSE when the turnover had dwindled drastically in the exchange.

Without settling for terminals of these bigger platforms, brokers here had settled for off-exchange transaction paying sub-brokerage fees to the BSE or NSE member, often at an amount mutually settled upon.

Normally, to own a terminal on the BSE or NSE, a broker has to pay around Rs 1-1.5 crore. Since it is expensive, the brokers have resorted to sub-brokerage under the BSE/NSE members paying them a commission.

The bourse is also gearing up to change its name from Calcutta Stock Exchange to Kolkata Stock Exchange. Members suggested the change at the annual general meeting held last Saturday, in the hope that it might revive the bourse’s fortune.

The 19-member CSE board will meet in mid-January to take stock of the situation and decide on a formal approach to the Registrar of Companies (RoC) regarding the change of name.

Members also proposed the induction of hard-core professionals into the board and a prompt decision on introduction of derivative products.