Commexes free to lower transaction fees without FMC nod

Commodity market regulator Forward Markets Commission has said that exchanges are free to fix the transaction fees, provided these do not breach the prescribed minimum of Re 1 and maximum of Rs 4 for a business of Rs 1,00,000.

"The commodity exchanges have the discretion to take a commercial decision on the transaction fee within the range prescribed in the existing guidelines," FMC chairman B C Khatua told PTI.

The regulator's comments has come at a time when national level exchanges NCDEX and NMCE are mulling to cut transaction fees, after leading bourse MCX decided to slash the charges from November 2.

Transaction fee of an exchange is paid by members and is calculated at the rate of every Rs 1,00,000 of business and on the basis of their daily turnover on the bourse.

According to the FMC guidelines, commodity bourses can charge a maximum of Rs 4 and a minimum of Rs 1 for every Rs 1,00,000 turnover.

"The exchanges should not change the fee structure arbitrarily," Khatua said.

Asked why an earlier decision of NCDEX to cut the transaction fee was disapproved, he said: "Early this year,NCDEX had fixed five paise fee for every Rs 1,00,000 turnover in the evening session, which we found was against the currentnorms and not in the best interest of the market."

The regulator intervened only when it found exchanges were violating the norms, Khatua said, adding that even MCX, which announced the change in the transaction fee on October 17, did not seek the approval.

Last week, MCX reduced transaction charges to Rs 2.50 for members whose average daily turnover is up to Rs 250 crore (Rs 2.5 billion). It has fixed the transaction charge at Rs 1.25 on a turnover between Rs 250 crore and Rs 1,000 crore (Rs 10 billion). And those having more than Rs 1,000 crore business, they will have to pay Re 1.

Currently, members in MCX pay a transaction fee of Rs 4 for a daily business of up to Rs 20 crore and Rs 3 for a turnover between Rs 20 crore (Rs 200 million) and Rs 100 crore (Rs 1 billion). While Rs 2 is charged on members having business between Rs 100 crore and Rs 300 crore (Rs 3 billion) and Re 1 for more than Rs 300 crore.

Whereas at NCDEX, members pay Rs 4 for turnover up to Rs 20 crore, Rs 3 for turnover between Rs 20 crore (Rs 200 million) and Rs 50 crore (Rs 500 million), Rs 2 for turnover between Rs 50 crore and Rs 125 crore (Rs 1.25 billion) and Re 1 for more than Rs 125 crore (Rs 1.25 billion).

At NMCE, members pay Rs 4 for business up to Rs 20 crore (Rs 200 million), Rs 3 for turnover between Rs 20 crore and Rs 100 crore (Rs 1 billion), Rs 2 for turnover between Rs 100 and Rs 200 crore (Rs 2 billion) and Re 1 for more than Rs 200 crore.