Discount brokers' revenue to trim 25% with new Sebi norms

MARKET regulator Sebi's revised equity index derivatives framework, announced on October 1, is expected to hit transaction volumes in the futures and options segment, ultimately impacting revenue and profitability of brokerages, especially discount brokers on one hand and on the other the revised transaction charges will directly trim their profits, warns a report.

- BENN KOCHUVEEDAN @ Mumbai

For many brokers, derivatives account for 95% of their volume, in line with market trends. However, the extent of impact will vary based on business model--being a discount or full-service brokers. While discount brokers are set to see at least 25% dip in their pretax profit, full service ones may find it easier to go with 10% fall in pre-tax profit, as per a Crisil analysis.

The Sebi blow came in on the heels of stock exchanges had revised their transaction charges from September 27, which will impact profitability, especially of discount brokers.