I’ve always wondered if there is a limit on the brokerage a broker can charge. Some brokers charge a fixed fee, while most charge a percentage like %.1 to %.3. My question is whether these numbers are just a function of the free market, or if they’re a product of regulations.
Is there a limit on what a broker can charge as brokerage? Is it regulated by the exchanges or SEBI?
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The upper limit on the brokerage than can be charged is 2.5%.
However I don’t think anyone is closer to this limit by any means.
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The Maximum brokerage that can be charged by a broker has been specified in the Stock Exchange Regulations and hence, it may differ from across various exchanges. As per the NSE & BSE Bye Laws, a broker cannot charge more than 2.5% brokerage from his/her clients.
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The maximum brokerage chargeable by a broker in relation to trades effected in the contracts admitted to dealing on the F&O and CDS Segment of NSE is maximum fixed at 2.5% of the contract value exclusive of statutory levies.
Source : NISM derivative study material.