Chapter 3 · Brokers, fees and settlement
What a trade actually costs
Four separate charges sit between the price you see and the money that leaves your account.
The price on the screen is not what you pay. Four charges sit on top, and each is calculated differently. Knowing the structure matters more than memorising the rates, because the rates change and the structure does not.
| Charge | Levied on | Who sets it |
|---|---|---|
| Broker commission | Transaction value, on a sliding scale — the rate falls as the value rises | SEBON |
| SEBON regulatory fee | Transaction value, a small fixed proportion | SEBON |
| DP charge | A flat amount per company per settlement, regardless of size | Your depository participant |
| Capital gains tax | Your profit on a sale, not the sale value | Government, withheld by the broker |
The one that surprises people
The DP charge is flat per company per settlement. It does not scale with the size of your trade. On a large purchase it is trivial. On a very small one it can be a meaningful percentage of what you invested.
This is the arithmetic that makes frequent tiny trades expensive. Buying Rs 2,000 of a stock five times costs you five DP charges; buying Rs 10,000 once costs you one.
Costs are paid twice
You pay charges when you buy and again when you sell. A round trip therefore has to overcome roughly double the one-way cost before you are level. For a short-term trade aiming at a small gain, the costs can be a large share of what you were hoping to make — work it out before you place the order, not after.
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