Transaction charges for F&O trading, why do they differ?

Hey @nithin, i hold multiple trading account with different brokers, I see that STT charges are same across but can’t seem to find why transaction charges vary and on what basis, can you please share some thoughts?

When trading on F&O, there are three intermediaries involved - trading member or brokerage, clearing member, and exchange. Trading member is where you place an order, and clearing member is who settles this with the exchange (essentially margins, P&L, etc). A brokerage can self-clear the trades or use a professional clearing member (PCM) for the clearing services. If the broker uses a PCM, the PCM will charge something called clearing charge which the broker will pass it onto the client as clearing charge. There are no clearing charges for equity trading as every broker is mandatorily required to self-clear.

So based on if you trade with a broker who clears their own trades or those who use a PCM, your clearing charges might differ. On your contract note, broker is required to show clearing charges and exchange transaction charges separately. But some brokers still show it combined.

At Zerodha, we self clear with the exchange, so none of our clients have to pay any additional clearing charge. Clearing charge even though might seem small, but it can quickly add up for active traders on F&O.
Do make sure to check how much you are paying for it if you are not trading with us.

I have a list of clearing charges by around 20 different brokers from before. Check this, do confirm these charges if you are trading with one of them.

You can check out the exchange transaction charges here.