NSE to roll back 6% hike in transaction charges on equity, F&O trading from Apr 1

The National Stock Exchange (NSE) has decided to roll back the 6% increase in transaction charges on equity cash and derivatives segments on its platform. The decision will be effective from April 1, the bourse said in a statement on March 24.

In January 2021, the exchange had hiked the transaction charges by 6% to augment the investor corpus in view of certain market exigencies due to broker defaults.

“NSE Board of Directors in its meeting held on March 23, 2023, decided to roll back the increase of 6% in transaction charges, in cash equities market segment and equity derivatives segment, with effect from April 1, 2023. The charges were earlier increased by 6%, with effect from January 1, 2021, partly to augment NSE Investor Protection Fund Trust (NSE IPFT) corpus in view of certain market exigencies due to broker defaults at that point in time,” the exchange said in a release.

“Further with objective to systematically augment the corpus of NSE IPFT, it was also decided to recalibrate the contribution to NSE IPFT from ₹0.01 per crore to ₹10 per crore in Cash Equities Market Segment & Equity Futures and ₹0.01 per crore to ₹50 per crore in Equity Options,” it said.

However, the above cut in transaction charges was partially offset by the recalibration of contribution to NSE IPFT, which will lead to an effective reduction impact on overall transaction charges by around 4%.

The announcement comes on the heels of the Finance Ministry raising securities transaction tax (STT) on Futures and Options (F&O) contracts with effect from April 2023. The F&O contracts are financial derivative instruments where the traders buy or sell an underlying asset such as shares, stock market indices, commodities, ETFs, at a predetermined price. These are contracts signed by two parties for trading a stock asset at a predetermined price on a later date, which help them in reducing future risk with their investment through pre-determined prices.

The government has hiked the STT by 23.52% on the sale of options and 25% on the sale of futures contracts, a move which will impact the high-frequency traders (HFT) as it will raise the cost of operations for HFT foreign portfolio investors (FPIs) in India. As per amendments to the Finance Bill 2023 passed in the Lok Sabha on Friday, STT on the sale of options has been hiked to ₹2,100 from ₹1,700 on a turnover of ₹1 crore. Besides, the STT levied on a turnover of ₹1 crore has been hiked to ₹12,500 against an earlier applicable levy of ₹10,000.