BSE, India's oldest stock exchange, has decided to refund 90% of the membership deposits it collected from stockbrokers, totaling around Rs. 150-180 crore and benefiting approximately 200 brokers. Previously, brokers received a 12% rebate on deposits over Rs. 10 lakh. Some brokers have asked to convert deposits into margins. Until 2010, BSE required deposits from Rs. 75 lakh to Rs. 1 crore but lowered fees to Rs. 10 lakh to gain over 300 new members amid competition. Historically, high membership fees and deposits were barriers for India's stock markets, though fees have reduced in recent years.

1. 90% of Membership Deposit to be Refund by BSE
BSE, the country’s oldest bourse, has decided to refund 90% of the amount it raised
as membership deposit from stockbrokers, bowing to pressure from many of its old
members. The move, which will benefit about 200 brokers, will cost the exchange Rs
150-180 crore.
“Earlier, too, the members were offered a transaction rebate of 12% on the excess
deposit over Rs. 10 lakh in lieu of the lock-in period. Even now, some members have
asked to convert their deposits to margin.” Until 2010, the exchange used to demand
deposits ranging from Rs. 75 lakh to Rs. 1 crore, depending on the category of
membership. But in 2010, it slashed fees to Rs. 10 lakh to counter competition from
newer exchanges like the MCX SX, while allowing its existing members to withdraw
deposit after a three-year lock-in. Lower fees helped the exchange add over 300 new
members.
Higher membership fees and deposits were considered major entry barriers to India’s
stock markets. The National Stock Exchange (NSE) started the system of deposit-
based membership at a time when BSE was still an elite club. Entry to BSE was
restricted to those who could afford the expensive membership card, with the cost
ranging from Rs. 1.5 crore to as high as Rs. 4 crore until seven years ago. A new cash
market membership on BSE now costs Rs 33 lakh, including some refundable charges
such as the base minimum capital, contribution towards trade guarantee fund and
sundry fees. Brokers paid over Rs. 5 crore before the exchange was demutualised in
2007.

2. The NSE fee for the equity cash segment, which has about 1,400 registered brokers, is
Rs. 1.25 crore, while the membership for the cash and derivatives markets is available
for Rs. 1.5 crore.
The NSE, too, had discussed a proposal to bring down membership fee on its platform
when BSE slashed it by 90%, but failed to implement it. The proposal was to fix the
cash segment fee at Rs 50 lakh, and Rs 75 lakh for the cash-plus-derivatives
membership.
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