What is the logic behind MCX transaction charges and why is it not the same for all brokers?
At Zerodha, the transaction charges on commodities are available here.
Total transaction charges include exchange clearing fees and clearing member charges (since most brokers use 3rd party clearing vendors for F&O). MCX charges 0.0026% on group-A commodities and the following on listed group-B commodities:
- PEPPER - 0.00005%
- CASTORSEED - 0.0005%
- RBDPMOLEIN - 0.001%
Exchanges (around the world) at the end of the month usually calculate average turnover for brokers and then incentivize by reduced transaction charges if the brokerage firm achieves above a certain base number turnover. In case of MCX, the 0.0026% can drop up to 0.00175% for turnover above Rs 350 crores per day. This essentially becomes an incentive/revenue for the brokerage firm to drive volumes on the exchange.
There are a few clients who have asked about giving back this incentive (extremely small amount of 0.001%), but this isn’t really possible. Firstly, we get to know how much this number is only after few weeks at the close of the month. So at that time to backdate and say who was part of the first 350 crores of turnover etc, is impossible to say when you have lakhs of clients. Also, this transaction charge along with GST is collected and paid to the respective authorities. Also its impossible to track & refund and then reverse GST paid etc.