Brokerage rates for stock market transactions are yet to bottom out. Reliance Money, the financial services division of the Anil Dhirubhai Ambani Group-promoted Reliance Capital, is set to unleash yet another round of price war in this segment.
According to an email sent by a Reliance Money franchisee to a prospective client, the company is offering a brokerage charge of 7.4 paise on every Rs 100 worth of delivery-based trades, and 2 paise on non-delivery trades, which some rival brokers admit is the lowest in the industry so far.
"We would not like to comment on this at this point in time. The details of the offering are still being worked out," a Reliance spokesperson said.
Reliance Money is to offer a common platform for investors to invest in all equity products, commodities, forex, IPOs, insurance and other financial products.
While the company has not formally announced the launch of its operations, many traders said they have been approached by Reliance Money franchisees . Retail brokerage houses fear that Reliance Money may rewrite the rules of the broking business, distorting business dynamics in the short term, the way the Reliance group had done when it forayed into the telecom sector some four years ago.
"Broking has completely become a balance-sheet game as there is very little to distinguish between the services offered by various firms," said the head of a retail brokerage house. "A large player like Reliance has the capacity to absorb losses for a couple of years, making life difficult for rivals," he added.
DELIVERY TRADES
In a Rs 500 card, an investor gets a maximum delivery limit of Rs 10 lakh; so, the initial fixed cost is 5 paise. The investor will be charged Rs 12 per trade if he purchases through a series of trades. If he buys shares worth Rs 10 lakh in 20 trades, at an average of Rs 50,000 per transaction, the total brokerage charge will be Rs 740 (500+240), which works out to 7.4 paise per Rs 100 worth of transaction
INTRA-DAY TRADES
For non-delivery trades, an investor can take exposure up to Rs 90 lakh on a Rs 500 card. Suppose the investor uses up his limit in 90 trades of Rs 1 lakh each, at Rs 12 per trade, his total charge will be Rs 1,580 (1,080+500)
"We would not like to comment on this at this point in time. The details of the offering are still being worked out," a Reliance spokesperson said.
Reliance Money is to offer a common platform for investors to invest in all equity products, commodities, forex, IPOs, insurance and other financial products.
While the company has not formally announced the launch of its operations, many traders said they have been approached by Reliance Money franchisees . Retail brokerage houses fear that Reliance Money may rewrite the rules of the broking business, distorting business dynamics in the short term, the way the Reliance group had done when it forayed into the telecom sector some four years ago.
"Broking has completely become a balance-sheet game as there is very little to distinguish between the services offered by various firms," said the head of a retail brokerage house. "A large player like Reliance has the capacity to absorb losses for a couple of years, making life difficult for rivals," he added.
DELIVERY TRADES
In a Rs 500 card, an investor gets a maximum delivery limit of Rs 10 lakh; so, the initial fixed cost is 5 paise. The investor will be charged Rs 12 per trade if he purchases through a series of trades. If he buys shares worth Rs 10 lakh in 20 trades, at an average of Rs 50,000 per transaction, the total brokerage charge will be Rs 740 (500+240), which works out to 7.4 paise per Rs 100 worth of transaction
INTRA-DAY TRADES
For non-delivery trades, an investor can take exposure up to Rs 90 lakh on a Rs 500 card. Suppose the investor uses up his limit in 90 trades of Rs 1 lakh each, at Rs 12 per trade, his total charge will be Rs 1,580 (1,080+500)