What are Brokerage Charges for Buying / Selling Using MTF

Brokerage charges on equity and F&O trades are largely based on the relationship between the client and the broker and hence there is no standard applicable rate. Here we look at margin trading charges and margin trading brokerage. Normally, there is no separate margin trading brokerage that is levied and the usual brokerage contracted for cash delivery, cash intraday, futures, and options is applicable on margin trades also. There are no separate margin trading fees or margin trading charges imposed on the customer, other than the interest charged on the debit in the margin account.

To understand margin trading fees and margin trading brokerage, we look at various types of trades that you can put in the MTF account and look at the overall margin trading brokerage inclusive of all statutory charges. That will give you the total margin trading charges applicable. Here is a detailed look at the margin trading charges applicable in margin trading.

Margin Trading Brokerage

Brokerage rates are contingent on the relationship between the broker and the trader and vary from broker to broker. For example, discount brokers offer much lower rates of discount compared to full-service brokers. Let us look at the margin trading brokerage for different types of transactions.

Brokerage and other charges for equity delivery

The following are the key charges applicable in this case.

• Brokerage is contingent on the client/broker agreement. For full-service brokers, the brokerage rate can go as high as 0.4% to 0.5% on one side as delivery brokerage. Discount brokers go as low as 0.10% on equity delivery or even offer zero brokerage.
• Securities transaction tax (STT) is charged on the buy-side and the sell-side of the transaction at the rate of 0.1% on the value of the transaction.
• Transaction charges are levied by the stock exchange and it is currently levied on delivery transactions at 0.00345% both by the BSE and the NSE.
• Goods and Services Tax or GST is charged at 18% on the sum of brokerage and transaction charges as calculated above.
• Additionally, there is SEBI turnover tax which is levied at Rs.10 per crore based on the value of the transaction
• Finally, stamp duty is levied at a uniform rate of 0.015% on the value of the transaction and is now standardized across states.

Brokerage and other charges for equity intraday

The following are the key charges applicable in this case.

• Brokerage is contingent on the client/broker agreement. For full-service brokers, the brokerage rate can go to 0.05% on each side. Discount brokers go as low as 0.03% on equity intraday, but most low-cost brokers do charge on intraday.
• Securities transaction tax (STT) is charged only on the sell side of the transaction at the rate of 0.025% on the value of the transaction.
• Transaction charges are levied by the stock exchange and it is currently levied on intraday equity transactions at 0.00345% both by the BSE and the NSE.
• Goods and Services Tax or GST is charged at 18% on the sum of brokerage and transaction charges as calculated above.
• Additionally, there is SEBI turnover tax which is levied at Rs.10 per crore based on the value of the transaction
• Finally, stamp duty is levied at a uniform rate of 0.003% on the value of the transaction and is now standardized across states.

Brokerage and other charges for equity futures

The following are the key charges applicable in this case.

• Brokerage is contingent on the client/broker agreement. For full-service brokers, the brokerage rate can go to 0.05% on each side. Discount brokers go as low as 0.03% on equity futures, but most low-cost brokers do charge on futures on the notional value.
• Securities transaction tax (STT) is charged only on the sell side of the transaction at the rate of 0.01% on the value of the transaction.
• Transaction charges are levied by the NSE and it is currently levied on futures transactions at 0.002% by the NSE.
• Goods and Services Tax or GST is charged at 18% on the sum of brokerage and transaction charges as calculated above.
• Additionally, there is SEBI turnover tax which is levied at Rs.10 per crore based on the value of the transaction
• Finally, stamp duty is levied at a uniform rate of 0.002% on the notional value of the futures transaction and is now standardized across states.

Brokerage and other charges for equity options

The following are the key charges applicable in this case.

In addition to the above charges, some additional costs that traders have to bear include call-n-trade charges, stamp charges, DP debit charges, pledge charges, DP AMC charges, off-market transfer charges, payment gateway charges, etc.

• Brokerage on options is normally flat and it varies between Rs.10 per lot and Rs.30 per lot although some full-service brokers also go up to Rs.50 per lot.
• Securities transaction tax (STT) is charged only on the sell side of the transaction at the rate of 0.05% on the premium value of the transaction.
• Transaction charges are levied by the NSE and it is currently levied on options transactions at 0.053% on the premium value of the transaction
• Goods and Services Tax or GST is charged at 18% on the sum of brokerage and transaction charges as calculated above.
• Additionally, there is SEBI turnover tax which is levied at Rs.10 per crore based on the value of the transaction
• Finally, stamp duty is levied at a uniform rate of 0.003% on the buy-side of the transaction

Margin Account

Here is what margin trading or buying on margin entails. Let us assume that you want to buy 10,000 shares of the State Bank of India. If you buy 10,000 shares of SBI in the equity market, it would cost nearly Rs.33 lakh to take delivery of that stock assuming the approximate current market price of Rs.330 per share. In case, you do not have the requisite funds in your trading account, you can open a margin account and trade with the broker. The margin account can be activated by eligible clients by just accepting the additional terms and conditions. Remember, only corporate brokers can offer margin trading.

How to Open a Margin Account?

Remember that the margin trading facility requires you to activate the margin trading facility once at the beginning. You don’t need to do it each time. There are various ways of activating your margin trading.

• By sending an email from your registered email id with margin activation request and quoting other relevant client codes and Demat code.
• By sending a written signed letter to activate the margin account
• The activate margin trading facility can be done even by making a phone call to your equity advisor from your registered mobile or landline number.
• Similarly, the margin trading facility can also be activated by just calling the call center, which is normally a toll-free number and authenticating yourself.
• Activation of margin trading facility can also be done by logging into your trading account using your internet password authentication and making a request
• Lastly, you can also use your downloaded trading app and log in through your mobile to make the activate margin trading facility request.

How to Open a Margin Trading Account?

You can use your regular trading and linked Demat account to activate the margin trading facility. The activation is normally done within 24-48 hours and once that is done then the value of shares in the linked Demat account automatically become eligible as margin based on the previous day's closing value of the stocks.

Once the margin account is opened, then the interest is only charged on the amount of debt that stands to your trading account. If the trading account is having a credit then there is no interest charged for the margin trading facility so it almost operates like an overdraft facility.