SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, A Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021
SMD/DBA-II/Cir-31/98
November 5, 1998
TO:
The President/Executive Director/Managing Director
of all Stock Exchanges
Dear Sir,
Sub : Availing of concessional rate of fees on jobbing transactions based on the Expert Committee Recommendations
The Expert Committee appointed by SEBI on the issue of turnover based fees of brokers had recommended that with respect to jobbing transactions identified and included in the turnover as proposed in the said report, concessional rate of fee of one two hundredth of one percent of the jobbing turnover calculated is to be computed.
Jobbing is undertaken by a broker who chooses to make market in any scrip. Since jobber manages his sale or purchase in a scrip in which he is making market by giving two-way quotes and by ensuring that he has a sale for every purchase and a purchase for every sale so that he does not have any obligation at the end of the day, Expert Committee recommended that all transactions that are squared off on the same day by a jobber should be classified as jobbing transactions. They had recommended the concessional rate of fee as mentioned above also for the risk undertaken by the jobber.
Recently we have received queries from some brokers on some squaring up transactions. It is clarified that transactions undertaken by a broker on behalf of his client or on his own behalf (i.e. Proprietary trading), where the broker is not giving two-way quote or making market, cannot be treated as jobbing transaction. Mere squaring off of transaction by a broker on his own account cannot be treated as jobbing, unless he is making market in a scrip by giving two- way quotes and all such transactions i.e. aggregate of buy and sale, whether proprietary, custodial or non- custodial, where the broker is not giving two-way quote or making market has to be included in computation of turnover for the purpose of calculating turnover based fees payable and registration fee is to be computed at one hundredth of one percent of turnover. The concessional rate of fee based on jobbing transaction cannot also be availed of in respect of proprietary, custodial or non- custodial square off within the same settlement
Further all transactions by a broker on behalf of his client or custodian has to be taken into account in computation of turnover for the purpose of calculating turnover based fees payable and registration fee is to be computed at one hundredth of one percent of turnover.
You are requested to bring the above clarification to the notice of all the members of your Exchange through a circular.
Yours faithfully,
SANGITA CHOURE
DIVISION CHIEF
SECONDARY MARKET DEPARTMENT
