What’s your broker charging you?
Buying and selling shares have always been a complicated affair. But today, with a host of brokerages competing for your business, it is getting even more complex. Suprotip Ghosh tells us...business Updated: Nov 13, 2007 00:00 IST
Buying and selling shares have always been a complicated affair. But today, with a host of brokerages competing for your business, it is getting even more complex. Different rates of discounts and a myriad array of charges make the whole affair even more difficult to understand than before.
Sunita Bhatnagar of Lucknow says that her brokerage firm, Indiabulls, charges her for so many different things that it is difficult for her to understand what she is paying in effect. She also says that while discounts were offered to her verbally, she never got them on paper.
Echoing her view is Govind Mohan Swamy from Ghaziabad.
Rakesh Kumar from Delhi says that India Infoline has offered a discount in verbal terms but has not followed it up with the same on paper.
An increasing number of small investors are facinfusing or misleading contract notes, often unsatisfactory investor service and verbal promises of discounts that are not being honoured, say many small investors.
According to documents with Hindustan Times, Indiabulls has charged investors under a head styled as “SEBI Transaction Charges” and “other charges”. And such heads often change, in effect to make customers pay more.
“Transaction charges does not mean exchange transaction charges only. It covers several other charges such as SEBI transaction charges, turnover charges to exchanges, contribution to Investor Protection Fund (IPF) of the exchanges and other incidental charges,” said an email from Indiabulls to Sunita Bhatnagar.
Indiabulls director Gagan Banga said: “SEBI does charge a transaction chon charge on trades, which depends on the number of years a brokerage has been doing business. The charges change after a broker has been around for five years.”
There are also turnover-related charges added to the total cost, he said. The total charge cacording to SEBI, be less than 2.5 per cent of the total cost of the transaction, Banga said. This information, however, was not given out to the investor, said Bhatnagar. A transcript of the email conversation between the investor and Indiabulls does not mnot mention the charges.
RK Nair, Director, Sebi said that the apex regulator would ‘look into the matter.’(See side story on what SEBI can do for you)
Kumar from Delhi also alleged the company had levied late charges on a cheque that was lying with the ny and not deposited. Indiainfoline’s Harshad Apte said: “We do not tolerate such cases and we are strict on this. We have appointed an ex-SEBI executive to deal with grievances and we penalize staff for such delays.”
The confusion, however, does not end here. While the brokerages said total charges in a particular transaction is mentioned on the trade screen in case of online trading, investors said the final charges could only be seen in the contract note generated two days later. There is a lot of ground to be covered.