Brokerage Economics: What One Order Actually Pays For
One order carries a charge, and a year of orders leaves the arrangement a contribution once its costs come off. Both are worked out below. On an order of Rs 1,00,000/- the arrangement keeps Rs 120.00/- and passes Rs 3.25/- to the venue. Across 36 orders that is Rs 4,320/-, the balance left lying adds Rs 1,250/-, and after Rs 2,900/- of cost the contribution from one client is Rs 2,670/-.
One order, then one client's year, on any figures entered
Ten boxes. The first four are what one order carries. The next six turn that into a year for one client and take the year's costs off it. Every step is shown, both identities are proved on the screen from the numbers actually in the boxes, and the answer at the bottom is allowed to go negative.
Ten boxes open on a whole year, so a complete reading is sitting there before anything is typed: Rs 120.00/- kept on each order, Rs 4,320/- of brokerage across thirty six of them, Rs 1,250/- earned on the balance left lying, revenue of Rs 5,570/-, and contribution of Rs 2,670/- once Rs 2,100/- of platform cost and Rs 800/- of signing cost have come off. Three more readings only the divisions produce: contribution is 47.94 per cent of the revenue it came out of, the Rs 120.00/- kept reads as 0.12 per cent of a Rs 1,00,000/- order, and the year's costs are covered at 13.75 orders, so the fourteenth order is the first that pays for anything.
Everything on this screen rests on one distinction, and it is the one worth carrying away. A charge is an amount. A rate is that amount divided by something. A charge and a rate are not two ways of saying the same thing, and a rate written down without the base it was divided by is a number that describes nothing at all.
The distinction sounds pedantic until it happens in practice. Somebody pays Rs 20.00/- on an order, works out that this came to 0.40 per cent, and carries the 0.40 per cent away in their head as though it were a property of the charge. The 0.40 per cent never was a property of the charge. The percentage was a property of that one order. On a different order the identical Rs 20.00/- reads as 0.002 per cent, and the two numbers are two hundred times apart with not one paise of difference in what left the account. Every reading this tool produces is shown twice, once as an amount and once as a rate, with the base written in the same line. Writing the base beside the rate is the only reliable defence against the mistake.
How does one order's charge become a year's contribution?
Two revenue lines and two cost lines, taken in that order, and the sequence is the whole of the arithmetic. The first revenue line is brokerage: what the arrangement keeps on one order multiplied by the number of orders, so Rs 120.00/- across thirty six orders is Rs 4,320/-. The second is what it earns on money the client has left lying with it rather than invested, here Rs 1,250/- on a balance of Rs 25,000/- at 5.00 per cent for the year. Whether an arrangement may earn anything at all on a balance a client leaves with it is a condition held by the authority, whose site is sebi.gov.in; not a word of that condition is written down or leaned on anywhere here. The venue's Rs 3.25/- is on neither line: it arrives from the client and leaves for the venue, and the screen shows it doing both rather than quietly netting it off.
The two cost lines behave differently from one another, and that difference is what makes a client profitable or not. Platform and servicing is Rs 2,100/- for the year and it lands whether one order goes in or three hundred. The signing cost of Rs 3,200/- was spent once, before the client had placed anything, so only a share of it belongs to this year: spread over four years that is Rs 800/-. Against revenue those two come to Rs 2,900/-. The balance covers Rs 1,250/- of that, leaving Rs 1,650/- for the orders to find at Rs 120.00/- each, so the year turns positive at 13.75 orders and the fourteenth order is the first that pays. Press the ten orders preset and the contribution reads minus Rs 450/-, printed with its sign rather than tucked into a bracket.
Only one half of the brokerage knows how large an order was, so splitting the same money into more orders makes the arrangement keep more. Brokerage for the year is the rate multiplied by the money moved, plus the flat amount collected once for every order. Hold the money at Rs 36,00,000/- and the first half never moves off Rs 3,600/-. The second half is Rs 20/- in a single order, Rs 720/- across thirty six and Rs 2,400/- across a hundred and twenty. A tailor's bill has the same two halves: the cloth is charged by the metre and does not care how many visits it took, and the fitting charge is the other way round.
A client moves Rs 36,00,000/- in the year either way. Split into thirty six orders the arrangement keeps Rs 4,320/-. Split into a hundred and twenty orders of Rs 30,000/- instead, what does it keep?
What does this tool compute, and what does it refuse to compute?
A screen that adds numbers and prints totals invites each total to be read as more than it is, so the boundary comes first. Two totals sit above. At least two more charges are left blank, so Rs 123.25/- is three of the charges on one order and not the cost of that trade. Rs 2,670/- is what one client leaves an arrangement on entered settings, and it is not anybody's reported figure.
The list of what this calculator computes on one order is short. First, a charge struck as a share of the order value, set here at 0.10 per cent. Second, a flat charge for the order, set here at Rs 20.00/-. Third, the transaction feeWhat a trading venue charges on the value of what changes hands on it, expressed as a rate on that value rather than as an amount for each order. charged by Kaveri Stock Exchange Limited at 0.00325 per cent. All three are worked on one chosen order value, and the year above them is those charges multiplied out, plus what a balance earns, less two cost lines.
The list of what it refuses to compute is longer and more important. The calculator computes no statutory chargeAn amount collected on a trade because an authority requires it, rather than because any party to the trade asked for it. What those amounts are is not written on this screen. of any kind. A regulator fixes those and moves them when it sees fit, and a screen still holding yesterday's version would go on adding it up with perfect confidence. Nothing is computed about the payment that sits inside a quoted price either. The payment is real, has no line on any confirmationThe document reaching a client once a trade is done, listing what changed hands and every charge taken on it. Something can be paid without ever showing up on one., and is worked in full separately. And it says nothing whatever about whether a trade was worth making.
The line this screen carries permanently is that its total is not the cost of the trade, it is three of the charges on it, and the rows left blank are named rather than quietly dropped. A blank row with a label on it is honest. A filled row that is wrong is not, and the difference between those two is most of what separates a usable tool from a dangerous one.
A charge of 0.10 per cent of order value on one side, and a flat charge of Rs 20.00/- for the order on the other. At what order value do the two come to exactly the same amount?
What does a charge struck on the order value come to?
A share of the order value behaves in the simplest way any charge can behave: doubling the order doubles the charge. At the control setting used here, 0.10 per cent, an order of Rs 1,000/- carries a charge of Rs 1.00/-, an order of Rs 1,00,000/- carries Rs 100.00/-, and an order of Rs 10,00,000/- carries Rs 1,000/-. There is no cleverness in it. The charge is one multiplication, repeated.
The field note matters more than the arithmetic in a tool like this one: the rate is found in the arrangement's own schedule of charges, published before the order goes in, and it is a typed input rather than a figure this screen supplies. The 0.10 per cent sitting here is a control setting, put in so that a shape has something to be. Go and find the real one, then come back and change the number.
A charge struck on order value works like a commission on selling a house. The agent takes a share, so a bigger house means a bigger cheque, whether or not the second sale took more evenings than the first. Nobody argues about the arithmetic. People argue instead about whether the work rose with the price, and a flat charge for the order is the answer that argument produces.
What does a flat charge for the order come to?
Rs 20.00/- on an order of Rs 1,000/-. Rs 20.00/- on an order of Rs 1,00,000/-. Rs 20.00/- on an order of Rs 10,00,000/-. The repetition is the whole of a flat charge, and the repetition is the point. Flat means the amount does not respond to the order value at all.
The field note again, in the same shape: this is found in the same schedule of charges, usually written as an amount for each order rather than as anything per rupee, and it repays reading slowly for what counts as one order. The definition of one order sits in the schedule, and it varies from one arrangement to the next.
Set the two shapes side by side across a range and one of them multiplies ten thousand times while the other does not move by a single paise. Order values from Rs 1,000/- to Rs 1,00,00,000/- span ten thousandfold. Across that span the charge struck on the order value runs from Rs 1.00/- to Rs 10,000/-, exactly ten thousand times larger. The flat charge runs from Rs 20.00/- to Rs 20.00/-. Everything interesting in this guide lives in the gap between those two behaviours.
One order of Rs 1,000/- and one order of Rs 10,00,000/-, with the same flat charge applying to both. What does that charge come to on each?
Where do the two shapes agree, and how is that point found?
The two shapes agree at one order value and nowhere else. 0.10 per cent of Rs 20,000/- is exactly Rs 20.00/-, the flat charge exactly, so an order of Rs 20,000/- pays the same either way.
The reusable part is the one division that finds that point for any pair of charges shaped like this: take the flat charge and divide it by the rate. Rs 20.00/- divided by 0.0010 gives Rs 20,000/-. A flat charge of Rs 30.00/- moves the meeting point to Rs 30,000/-. A rate of 0.05 per cent moves it to Rs 40,000/-. The crossing point of two charges shaped like this never has to be looked up again.
Under that value the flat shape costs more, Rs 20.00/- against Rs 5.00/- on an order of Rs 5,000/-, and over it the shape struck on the order value does, Rs 100.00/- against Rs 20.00/- on an order of Rs 1,00,000/-. The field note here is unusual, and worth saying plainly. Nothing in this section is found anywhere. The meeting point is a division worked from two numbers already to hand, and it is the only part of this screen that needs no source at all.
Move one order value and watch three charges, twice over
Only the order value moves. The rate on the order value stays at 0.10 per cent, the flat charge stays at Rs 20.00/-, and the venue's rate stays at 0.00325 per cent. The upper drawing reads all three in rupees. The lower one reads the same three as rates of that order value, and it moves in the opposite direction. Moving the opposite way is the whole reason the lower drawing is here.
Rs 1,00,000/- order value
At an order value of Rs 1,00,000/-, the charge struck on the order value comes to Rs 100.00/- at 0.10 per cent of order value, the flat charge comes to Rs 20.00/- which is 0.02 per cent of order value, and the transaction fee of Kaveri Stock Exchange Limited comes to Rs 3.25/- at 0.00325 per cent of turnover. The three together come to Rs 123.25/-, which is three charges and not the cost of a trade.
Educational illustration. Invented arrangement, control settings throughout, one invented venue's own rate, no statutory charge computed at any setting, and no payment sitting inside a quoted price computed at any setting. The total shown is three charges and is labelled that way. No real tariff is reproduced anywhere on this screen.
What does the venue itself take on the same order?
Put the venue's own rate beside the two charge shapes and the sizes stop being abstract. Kaveri Stock Exchange Limited charges a transaction fee of 0.00325 per cent of turnover. Read on one order that comes to Rs 3.25/- on Rs 1,00,000/-, Rs 32.50/- on Rs 10,00,000/-, and Rs 325.00/- on Rs 1,00,00,000/-.
On an order of Rs 1,00,000/- the venue's own rate produces Rs 3.25/- while the two charge shapes on the same order produce Rs 100.00/- and Rs 20.00/-. No verdict of any kind attaches to that comparison. Reading a moral into those three numbers would be very easy, and there is not one there. The three parties are not doing the same job, they are not carrying the same obligation, so a low price standing next to an unread contents list settles nothing in either direction.
The field note is about where a venue's rate comes from and who it touches. The venue's rate is published by the venue itself. The rate applies to what changes hands rather than to who placed the order. Its base is turnover for that reason, and not the order value. The client has no relationship with the trading venueThe place where buying and selling interest is brought together and matched. Which venues exist and what each of them does is settled separately. at all, so the venue's fee reaches the client through whichever arrangement carried the order rather than arriving from the venue directly.
On one order of Rs 1,00,000/-, what does the transaction fee of Kaveri Stock Exchange Limited at 0.00325 per cent come to?
The same flat charge of Rs 20.00/- is paid on a small order and on a large one, and each is then read as a percentage of its own order value. Same, a little different, or very different?
Why does one unchanged charge read as two rates two hundred times apart?
This is the reading the whole screen exists to produce, so here it is with both divisions written out. Rs 20.00/- on an order value of Rs 5,000/- is 0.40 per cent of order value. The identical Rs 20.00/- on an order value of Rs 10,00,000/- is 0.002 per cent of order value. Two hundred times apart. Same rupees, same charge, same arrangement, same everything except the number underneath the division.
The consequence for any percentage heard quoted is blunt: a charge quoted as a percentage is unusable until the order size it was worked out on is known. Somebody who says their brokerage is 0.40 per cent has said something about one order of theirs and nothing at all about what they pay. Somebody who says it is 0.002 per cent may be paying exactly the same rupees on a much larger order. Neither statement is false and neither is useful.
The household version runs the same way. A delivery charge of Rs 20.00/- on a small grocery order is a tenth of what was spent; the same Rs 20.00/- on a full month's shopping barely registers. The two baskets are in front of them, so nobody is confused by that. The confusion only starts when the percentage travels on its own and the basket stays behind. The field note is worth keeping: neither of these rates is found anywhere. Both are divisions worked by hand, and this screen shows the division rather than only its answer. Showing the division is what makes the number underneath impossible to lose.
Somebody's brokerage works out at 0.40 per cent. What is the one thing needed before that number tells anything at all?
One rate is 0.10 per cent of order value and another is 0.00325 per cent of turnover. What stops those two being set side by side and one called about thirty times the other?
Which rows does this tool leave empty, and why?
Two rows, drawn on screen with labels on them and nothing inside them, and the reason each is empty is written in plain sight rather than tucked into a note at the bottom.
The first is the statutory charges collected on a trade, blank for the reason already given, with SEBI and sebi.gov.in printed inside the row where the number would sit. The second is the payment sitting inside the quoted price. The payment inside a quoted price is real, is frequently larger than everything above it, has no line on any confirmation, and is worked in full separately. The payment therefore sits outside the total here.
The honest closing line of the whole tool is that the two largest items on the screen may well be the two with nothing in them. Carrying an uncomfortable sentence like that is the difference between a screen that helps and a screen that flatters. A named empty row hands the reader a question to take to the source. A filled row that has gone stale hands over an answer that invites trust it has not earned.
The screen adds three charges and shows a total of Rs 123.25/- on an order of Rs 1,00,000/-. Is that total the cost of the trade?
The failure: a percentage that travelled without its order value
The failure here is quoting a charge as a percentage without the order size it was worked out on, and what makes it worth a whole block is that it is committed by careful people rather than careless ones. Converting a charge into a percentage is exactly what somebody does when they are trying to make two things comparable. The instinct is right. The arithmetic is right. The mistake is that the percentage gets carried away from the one number that gave it meaning.
Follow it through. A reader pays Rs 20.00/- on an order of Rs 5,000/-, works out that this is 0.40 per cent, and files the figure away. Weeks later they are looking at an order of Rs 10,00,000/- and they reach for the number they remember. 0.40 per cent of Rs 10,00,000/- is Rs 4,000/-, and the charge they will actually pay is Rs 20.00/-, so the estimate is two hundred times too large. Nothing about the arrangement changed. Nothing about the charge changed. Only the order value under the division changed, and it changed by two hundred times.
Who makes this reading: somebody being careful. The cost: an estimate wrong by a factor of hundreds in either direction, and a comparison between two arrangements that turns out to have been a comparison between two order sizes wearing a disguise. There is a second version running the other way, and it is just as easy to fall into. Set a rate struck on order value beside a rate struck on turnover, such as the venue's 0.00325 per cent, and the comparison is between two numbers whose bases are different quantities held by different parties. The fix in both directions is one habit: a rate is never written without its base in the same sentence, and never carried away from the number it was worked out on.
How does somebody about to place an order use any of this?
The four minutes a careful household spends before the first order goes in
Four steps, taken in that order, and the same four serve somebody putting aside a few thousand rupees each month and somebody moving a lump sum after a property sale. First, open the schedule of charges and copy out two numbers rather than one: the rate struck on order value and the flat amount for the order, if both exist. Copying one and not the other is how people end up comparing arrangements on the half of the charge that happens to be printed largest.
Second, the division that finds the meeting point takes ten seconds and it settles which half of the range a given set of orders sits in. The flat amount divided by the rate gives that value. If the answer sits above the orders typically placed, the flat shape is the one costing more on a typical order; if it sits below, the shape struck on order value is. Neither answer settles which arrangement to hold, and the moment somebody uses this arithmetic to conclude that one arrangement is better than another, they have stopped doing arithmetic and started giving advice. The contents of each arrangement differ as much as what each charges, and a price is meaningless against an unread contents list.
Third, the two rows this screen leaves blank belong written down beside those two numbers. An estimate carried in the head then has holes in the right places. And fourth, a charge quoted as a percentage warrants one question and only one: on what order value? An analyst reading an arrangement's revenue does the same thing from the other end, dividing revenue by turnover to get an average rate and then naming the base out loud. A rate quoted without its base cannot be compared with the next year's or with anybody else's.
An arithmetic screen can be checked with a pen. Nine operations produce every rupee above, and the whole list is short: Rs 1,00,000/- multiplied by 0.0010, Rs 1,00,000/- multiplied by 0.0000325, Rs 20.00/- divided by 0.0010, Rs 20.00/- divided by Rs 5,000/-, Rs 120.00/- multiplied by 36, Rs 25,000/- multiplied by 0.0500, Rs 3,200/- divided by 4, Rs 5,570/- less Rs 2,900/-, and Rs 1,650/- divided by Rs 120.00/-. Nothing else was needed and nothing else was used.
Who sets the conditions on what may be charged?
Five of the things this screen circles are set elsewhere. A regulator decides each of them and revises it whenever it chooses, so a figure typed in here would go from correct to confidently wrong overnight rather than simply ageing. Each one therefore gets a row below whose value column stays blank, carrying the name of the body that holds the answer in the space the answer would have taken.
The first row is the reason this screen is usable at all, and it deserves the extra sentence: the schedule has to be published before an order goes in, and that requirement is exactly what allows two real numbers to be brought in and typed over the control settings used here. Without that requirement this tool would be an arithmetic exercise with nowhere to get its inputs. The fourth row covers two separate entities, and is worth reading twice for that reason. Kaveri Stock Exchange Limited is one, and the clearing corporationThe separate company that steps in after two orders have been matched and becomes the party each side then faces. It is not the venue that did the matching. of Kaveri Stock Exchange Limited is another, and the conditions on which each may charge belong to that row separately rather than jointly.
Five conditions named here, each with its value set elsewhere
| What is set | The value here | Who sets it |
|---|---|---|
| What a broker may charge a client, and how the charge is disclosed before the order is placed | Not stated here | SEBI at sebi.gov.in |
| The statutory charges collected on a trade, at what amounts, and by whom | Not stated here | SEBI at sebi.gov.in |
| What a broker discloses about every charge that reaches the client | Not stated here | SEBI at sebi.gov.in |
| The conditions on which an exchange and a clearing corporation may each charge | Not stated here | SEBI at sebi.gov.in |
| What a broker may do with money a client leaves with it, and whether anything earned on that balance may be kept | Not stated here | SEBI at sebi.gov.in |
The sheet is meant to be carried to the address printed in it, with the middle column filled in from there. Blank, it still earns its place: it names which conditions there are and whose door each answer sits behind. Every one of the five moves over time, and that movement is precisely why none of them is typed in above. A box that earns something had better say who decides whether it may, so the last belongs with the box for a balance left lying.
Last one, and it is the sentence to carry away from this screen. Which of these is it?
Where the empty cells on this screen get their values
| What is covered elsewhere | Who settles it | Site | Checked |
|---|---|---|---|
| What an arrangement may charge a client, and how that charge has to be shown before an order goes in | Securities and Exchange Board of India | sebi.gov.in | 24 August 2026 |
| Which statutory charges are collected on a trade, at what amounts, and by whom | Securities and Exchange Board of India | sebi.gov.in | 24 August 2026 |
| What has to be disclosed to a client about every charge that reaches them | Securities and Exchange Board of India | sebi.gov.in | 24 August 2026 |
| The conditions on which a trading venue and a clearing corporation may each charge | Securities and Exchange Board of India | sebi.gov.in | 24 August 2026 |
| What may be done with a client's uninvested balance, and whether an arrangement may keep anything earned on it | Securities and Exchange Board of India | sebi.gov.in | 3 September 2026 |
Kaveri Stock Exchange Limited and its clearing corporation are invented.
Educational material. Not advice on any investment, tax, budget or market position.