Shares of Angel One slumped 10% on 2 July after the market regulator, the Securities and Exchanges Board of India (SEBI), issued a new circular revising the market intermediary charge mechanism. 

SEBI’s new circular stipulates that Market Infrastructure Institutions (MIIs), such as stock exchanges and clearing corporations, are prohibited from offering discounts based on turnover.

Currently, MIIs such as exchanges and depositories impose transaction charges and depository fees on brokers using a slab-wise structure. Brokers, in turn, apply a similar slab-wise fee structure to their customers.

However, the timing of these charges varies as brokers typically recover these fees from clients daily, while MIIs receive the aggregate fees from members on a monthly basis. As a result, the total charges collected by brokers from clients are higher than the charges paid to MIIs at the end of the month due to the slab benefits.

Discount brokers currently earn between 15% and 30% through transaction charge discounts, whereas deep discount brokers earn 50% to 70%. 

However, the revised circular from SEBI states that the MII charges that are to be covered by the end client should be “true to label”, which means that if any MII charge is levied on the end client by members (depository participants, stockbrokers, clearing members). 

At 11:58 am, the shares of Angel One were trading 8.09% lower at Rs 2,369.95 on NSE.