True-to-Label Charges: How SEBI's Uniform Tariff Mandate Transformed Broker Pricing
SEBI's landmark 'True-to-Label' directive mandated Market Infrastructure Institutions (MIIs) to charge uniform transaction fees regardless of trading volume, putting an end to retrospective volume rebates.
1. The End of Slab-Based Rebates
Previously, exchanges charged discount brokers tiered rates based on cumulative monthly volume (e.g. 0.0027% for mega volumes vs 0.0035% baseline). Brokers charged clients the higher rate and pocketed the rebate difference as high-margin ancillary revenue.
2. Uniform Exchange Rates (0.00297%)
The NSE and BSE standardized equity cash and derivative turnover rates at flat, true-to-label percentages (NSE cash at 0.00297%). Any charge collected by a broker under the exchange fee head must match the exact debit levied by the clearing corporation rupee-for-rupee.
3. Impact on Broker Fee Models
With rebate revenue eliminated, brokers adapted by slightly adjusting equity delivery pricing, Demat account opening fees, or introducing flat API access subscriptions while preserving core zero-brokerage delivery models.
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