Sebi may amend norms on charging registration fees from stock brokers

Mumbai, January 24: | Updated: Jan 26 2002, 05:30am hrs
The Securities and Exchange Board of India (Sebi) is expected to amend its regulations to incorporate revised fees scheme based on the turnover of stock brokers. The market regulator is expected to move in this direction following the appellate authority -- Securities appellate Tribunal (SAT) -- turning down its order denying registration to CIL Securities Ltd, a member of the National Stock Exchange (NSE)’s derivative segment for non-payment of turnover fees.

After such an amendment coming into force, Sebi will be able to demand turnover fees from the brokers for the capital market segment. It may be recalled that in its last meeting, Sebi board also decided to amend its regulation to this effect.

Recently, SAT struck down Sebi’s directive on refusal to register CIL Investment, a broking member for derivative segment for non-payment of turnover fees.

CIL Securities Ltd, a National Stock Exchange (NSE) broker, had applied for registration as derivative market segment with Sebi, but the market regulator refused to grant certification for non-payment of turnover fees.

Mr K Balkrishna, counsel for CIL, had argued in SAT that CIL’s dues to be recovered from the capital market segment, cannot be a ground to deny registration to carry out business in the derivatives market. The activity in the derivatives market is independent of capital market segment.

Not only that, Mr Balkrishna further submitted that based on the legal opinion, CIL had worked out Rs 42,697 as the fees payable by it and paid the amount as was done by about 300 other brokers. In addition, it also paid Rs 25,000 towards registration fees in the derivatives segment which Sebi has already credited to its account.

Sebi submitted that the liability of the CIL Securities in respect of registration fees payable in the capital market segment in the NSE as per the total turnover figures furnished by the exchange was Rs 1.09 crore as principal and Rs 44.28 lakh as interest. Against this, the company has paid only Rs 67,697 and as such there was huge liability in respect of payment of fees.

However, Sebi representative submitted that the regulations have not been amended to incorporate the revised fees scheme, but that does not in any way take away the authority underlying Sebi’s instruction to pay the fees.

The capital market regulator would have to amend regulations to insert the condition for payment of dues to grant certificate for registration, SAT said in its order.