Yes, you heard it right. Most stock brokers in India are charging higher Exchange Transaction Fee than what stock exchanges allows them to charge. To understand how they are doing this lets get in to detail of it.
Professional Clearing Member Fee (PCM Fee or Clearing Transaction Charges)
All Stock Brokers are Trading- Cum- Self Clearing Members for Equity Segment i.e. Cash Market.
NSE and BSE offer four types of membership for Equity Futures & Options (Equity F&O) and Currency Futures & Options (Currency F&O). Any Stock Broker can take any one type of membership from first three memberships for Futures and Options. Stock Broker can take different membership for different segment and exchange e.g. Stock Broker can be Trading Cum Self Clearing Member for Equity F&O and Trading Member for Currency F&O. Stock Broker cannot become Professional Clearing Member (PCM) and PCM cannot become Stock Broker.
|
Types of Membership |
Cash Segment |
Futures & Option Segment |
|
Trading Member |
Not Possible |
|
|
Trading Cum Self Clearing Member |
|
|
|
Trading Cum Clearing Member |
Not Possible |
|
|
Professional Clearing Member |
Not Possible |
|
Membership can be taken for any segments individually or in combination:
| Membership Type | Activities allowed |
| Trading Member | This category of membership entitles a member to execute trades on his own account as well as on account of his clients but, clearing and settlement of trades executed through the Trading Member would have to be done through a Trading-cum Clearing Member or Professional Clearing Member of the Exchange |
| Professional Clearing Member | This category of membership entitles a member to execute trades and to clear and settle the trades executed on his own account as well as on account of his clients. |
| Trading Cum Clearing Member | This category of membership entitles a member to execute trades on his own account as well as on account of his clients and to clear and settle trades executed by themselves as well as by other trading members who choose to use clearing services of the member. |
| Trading Cum Self Clearing Member | This category of membership entitles a member to clear and settle trades of such members of the Exchange who choose to clear and settle their trades through this member. |
