If I want to take NSE Alpha membership, what are the day to day compliance to be followed

[Prayag]

There is an old thread (NSE Alpha Membership) in which Nithin answered questions related to NSE Alpha membership. It still remains relevant for many of your questions. Quoting directly from that thread where relevant

@Finance_Man1

1. What are those day to day compliance and reporting requirements I have to follow?

There is a Compliance Calendar which lists out annual, half yearly, quarterly, daily compliance requirements for the members of the exchange

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@Finance_Man1

2. Do I need to hire staff for any specific operations?

@nithin

To be live on the exchange, you will need a trading platform and a backoffice platform. If you are happy with the NOW trading platform, exchange gives you free of cost. But the backoffice platform to process trades, maintain ledger etc will cost you a couple of lakhs a year atleast. You might need to also hire a person to do this which will be additional.

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@Finance_Man1

3. Expected cost for software and other infrastructure buildup (will use NSE’s NOW software)

@nithin

To be live on the exchange, you will need a trading platform and a backoffice platform. If you are happy with the NOW trading platform, exchange gives you free of cost. But the backoffice platform to process trades, maintain ledger etc will cost you a couple of lakhs a year atleast.

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@Finance_Man1

4. Deposit money with NSE, and out of total deposit amount, how much can be used for trading?

As far as I can find, that initial deposit ( aka Interest Free Security Deposit (IFSD) ) is only returned when you surrender the membership and not before that. But as suggested above, better to ask NSE directly

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@Finance_Man1

5. I want to trade through algo, so API documentation buildup and integration with NSE’s server cost?

@nithin

If you want to do algo trades, you need to have the entire execution management system + APIs + frontend to code strategies etc. Bare minimum will cost you atleast Rs 12lks a year including infra costs.

As that thread is old, that cost might be out of date. In recent Kite Dev forum threads, the cost for co-location (mainly used for HFT) is mentioned as around 18L/annum

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@Finance_Man1

6. Any agency/company helping in taking NSE’s membership? and helping in day to day compliance fulfillment?

Couldn’t find any agency/company advertising such services on the internet. But I think full-service law firms specializing in this area would be able to help

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@Finance_Man1

7. Total one time cost? and yearly recurring cost?

Many of the one-time and recurring costs have been mentioned above. For exchange specific one-time & annual costs, refer to this

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@Finance_Man1

8. Is there any additional cost to get market data feed ?

Basic market feed is provided free of cost to all trading members (Found this mentioned in a SEBI document) but for TBT data (which might be helpful in algo trading) isn’t free (refer to this thread - How do I get tick by tick data directly via NSE - #2 by nithin)

Presently, the Exchanges provide a snapshot of the 5 best bid and ask quotes free of cost to all the trading members. This snapshot is updated almost every second. Trading members and their constituent clients place orders based on the best bid and ask quotes displayed in the snapshot.

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@Finance_Man1

9. Which way ll be better, Individual?, partnership?, proprietorship? LLP? from taxation and liability purpose?

This is something a CA or a lawyer specializing in this area would be better able to guide/help you with

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Lastly, I do want to share a tweet that I came across. For more context, this was a conversation between a trader (who posts daily P/Ls running into 6-7 figures consistently) and a person (who asked if NSE Alpha membership would be an alternative for them). From what I can guess, that trader would be managing capital in the range of 8-9 figures but even they are frank enough to say that NSE Alpha membership isn’t for them due to various regulatory/compliance/capital/infra burden that Alpha brings with it. Maybe Alpha membership doesn’t make sense until one is managing capital in the range of 9-10 figures. This is also what Nithin remarked in the original thread

@nithin

In today’s world with brokers like us, I can’t think of any reason why you would want to be a brokerage. Unless you become a hedge fund and start managing tens of crores of rupees.