Sebi’s new mandate: The beginning of the end for zero brokerage fees?
Last Update Date: 05-10-2026
Published by Mint
Abhishek Kumar's role: Wrote this article
Abhishek Kumar wrote this article on SEBI's true-to-label charges rule, arguing that it moves the market towards equal treatment of brokers, even if some clients may end up paying higher brokerage.
What Abhishek Kumar said
How have discount brokers been able to offer zero brokerage at all?
Partly through the plumbing, as I understand it. Exchanges share a slice of their transaction charges with brokers who bring large volumes, as slab-based rebates, and brokers collect those charges from clients daily while settling with the exchange monthly, so they sit on a float they can earn on in the meantime. Each rebate looks tiny per trade, but across millions of trades it becomes a meaningful revenue line, and that is what has subsidised free or near-free brokerage.
What does SEBI's 'true to label' circular actually change?
Two things, in my reading. First, any exchange or depository charge a broker recovers from a client must be exactly the amount the exchange or depository itself receives, so the broker cannot keep a margin hidden inside it. Second, those institutions must charge every member the same rate instead of volume-based slabs. Together these cut off the rebate and float that fed the discount model, which SEBI frames as giving every broker, large or small, equal access to market infrastructure.
Will I end up paying more brokerage because of this rule?
Possibly, but not certainly. Brokers losing rebate income can either raise brokerage or absorb the hit and recover it elsewhere. Many new-age brokers are backed by venture and private-equity money and may choose to bear the loss to hold or win market share, at least for a while. So the visible effect on a retail client depends on who blinks first; I would watch the charges on the contract note rather than assume either outcome.
Is it fair to end the discounts that small investors have enjoyed?
I see it as a question of equality versus fairness. Equal means everyone gets the same thing; fair means everyone gets what they need, and the two are not identical. Some clients will feel worse off, but a rule that charges every intermediary the same rate and bans hidden mark-ups passes the equality test, and in my view moves the market toward a level playing field. Reasonable people disagree on this, and I am happy to agree to disagree.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on money management
This opinion piece examines a 1 July 2024 SEBI circular for stock exchanges, clearing corporations and depositories, effective 1 October. It explains how discount brokers earned from volume-based exchange rebates and from float on collected charges, and how uniform, true-to-label charges could push brokerage fees up or leave brokers to absorb the loss.
Publisher source
Sebi’s new mandate: The beginning of the end for zero brokerage fees?