Anil Ambani group's Reliance Money said it has become the world's most cost-effective broking company in the world.
NEW DELHI: Anil Ambani group's Reliance Money on Wednesday said it has become the world's most cost-effective broking company in the world, despite India being dubbed among the most expensive markets in terms of transaction costs.
Indian bourses, one of the best performers of the world, are more expensive than a number of markets like the US, UK, Japan and even emerging markets like Russia and Brazil, a new survey has said.
According to the survey conducted by global financial consultancy Elkins/McSherry, the average brokerage charge for delivery-based trades in India is around 30 basis points, while the total transaction cost is about 51 basis points after including charges like stamp duty and service tax.
"India still has very high brokerage rates and there is scope for significant reduction in brokerage rates and market impact costs," Reliance Money CEO Sudip Bandyopadhyay said.
"In our quest to offer the most cost-effective broking platform, we have become the industry's lowest cost service provider not only in India, but also in the world," he said.
Elkins/McSherry put India among costliest in the world after compared the transaction costs for 47 countries.
The markets costlier than India include Peru, Philippines, Egypt, Indonesia, Colombia and Chile, while Venezuela is most expensive with an average transaction cost of 90 basis points.
Reliance Money CEO said that other Indian brokerage firms would also cut down the costs over a period of time and eventually Indian market would become more cost effective.
"There is set to be a downtrend in transaction costs and in next couple of years, India should come in line with other markets," he noted.
Reliance Money's average brokerage charge is about one basis points -- the world's lowest, and the total cost after including the market impact charges works out to be about 15 basis points if the transactions are executed through it.
According to Reliance Money, in just about six months of starting operations, over 2.5 lakh customers have started trading with it and its average turnover is over two per cent of the total exchange turnover in the country.
The Elkins/McSherry survey found that average transaction costs in developed markets like the US, Germany, UK, Japan, Hong Kong and France are much lower. In the US, the transaction costs are 14.8 and 19.44 basis points for NYSE and Nasdaq respectively, while it is 15.83 per cent in Japan, 19.94 per cent in Germany and 22.83 per cent in France.
Some countries have varying cost structure for buying or selling the shares. According to the study, the average buying cost in Ireland is 127 basis points, while selling shares is cheaper at 28 basis points.
In the UK, the buying cost is 69 basis points whereas selling is much cheaper at 20 basis points.
The markets with a higher average transaction costs than India include Peru (86.94), Philippines (70.5), Egypt (66.41), Indonesia (58.24), Colombia (68.08), China (51.84) and Chile (51.91).
Further, the survey revealed that average commission in India is 30.06 basis points which is higher than other BRIC countries -- Brazil (23.92), Russia (14.84) and China (22.2).
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