The Securities and Exchange Board of India (“SEBI”), vide its circular dated July 1, 2024, has directed the Market Infrastructure Institutions (“MIIs”) to comply with the following additional principles while designing the processes for charges levied on their members (which are to be recovered from the end clients):
- MII charges that are to be recovered from the end client should be ‘True to Label' i.e. if a certain MII charge is levied on the end client by members (i.e. stock brokers, depository participants, clearing members), it should be ensured by MIIs that the same amount is received by them;
- the charge structure of the MII should be uniform and equal for all its members instead of slab-wise charge which is dependent on volume/activity of its members; and
- the new charge structure designed by MIIs must give due consideration to the existing per unit charges realised by MIIs so that the end clients are benefitted with the reduction of charges.
In line with this circular, SEBI has directed the MIIs to redesign the existing charge structure and associated processes to comply with the provisions of the circular and take necessary steps to put in place the requisite infrastructure and systems for implementation of the circular. Further, SEBI has also directed the MIIs to communicate the status of implementation of the provisions of the said circular to SEBI.
This circular will come into effect from October 1, 2024.
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