Sebi to look into stock broker concerns over MDR on UPI transactions

Brokers in discussion with the market regulator as the charge raises operational cost

The Securities and Exchange Board of India (Sebi) will look into the issues raised by stock brokers on the new merchant discount rate (MDR) for large fund transfers via the Unified Payments Interface (UPI), Chairman Tuhin Kanta Pandey said on Thursday.

The MDR for capital market transactions has been set at 0.02 per cent of the transaction value, with a cap of ₹300 for payments towards mutual funds, securities, stock brokers, dealers, and investment advisors. The MDR framework will come into effect from October 15.

However, recurring standing instructions or UPI mandates such as those for mutual fund SIPs (systematic investment plans) will not carry MDR charges.

“I think there are some important issues there. We will certainly look into them and see how we can ease them,” Pandey said on the sidelines of National Bank for Financing Infrastructure and Development's (Nabfid’s) Infrastructure Conclave.

Several brokers had raised concerns on the MDR charges as under the mandate by Sebi, brokers need to return unused funds — known as the client float — back to clients periodically. Sebi introduced the norm to transfer the client float back to clients in order to prevent brokers from misusing the funds.