Can someone explain me the logic on total transaction charges when trading on MCX?

Commodities
1

I see on Zerodha charge list the transaction charges as 0.0036% and 0.00275% for non - agri and agri respectively. How is this calculated and who earns this? I have also seen other brokerage firms who charge much more. Why does this differ?

2

Total transaction charges include exchange clearing fees and clearing member charges (since most people use 3rd party clearing for F&O).

MCX charges 0.0026% and 0.00175% on non-agri and agri respectively. 0.001% are our clearing member rates. So together adds upto what we charge.

Btw, exchanges (around the world) usually calculate average turnover for brokers and then incentivize by reduced transaction charges if the brokerage firm achieves above a certain base number turnover. In case of MCX the 0.0026% can drop upto 0.00175% for turnover above Rs 350 crores per day. This essentially becomes like an incentive for the brokerage firm to drive volumes on the exchange. There are a few clients who have asked about giving back this incentive (extremely small amount of 0.001%), but this isn’t really possible. Firstly, we get to know how much this number is only after few weeks at the close of the month. So at that time to back date and say who was part of the first 350 crores of turnover etc, is impossible to say when you have lakhs of clients. Also, this transaction charge along with GST is collected and paid to the respective authorities. Again impossible to refund and then reverse GST paid etc.

Can’t comment about how other brokers charge their transaction charges.

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7

Update: Effective April 02, 2018, the transaction charges have been revised by the Exchange. MCX has now categorized commodities into Group A commodities and Group B commodities.

Transaction charges for Group A commodities is 0.0026%, following commodities are classified as Group A commodities:

ALUMINI
GOLDPTLDEL
ALUMINIUM
LEAD
BRCRUDEOIL
LEADMINI
CARDAMOM
MENTHA OIL
COPPER
NATURALGAS
COPPERM
NICKEL
COTTON
NICKELM
CPO
SILVER
CRUDEOIL
SILVER1000
CRUDEOILM
SILVERM
GOLD
SILVERMIC
GOLDGUINEA
ZINC
GOLDM
ZINCMINI
GOLDPETAL

Following commodities form part of Group B and the respective transaction charges levied are mentioned alongside:

BLACK PEPPER 0.00005%
CASTORSEED 0.0005%
RBDPALMOLEIN 0.001%