Brokerage, Demat & Account Setup

Question 1

(a) Numerical charges (10 marks)

Buy turnover $= 200 \times 450 = ₹90{,}000$ Sell turnover $= 200 \times 458 = ₹91{,}600$ Total turnover $= ₹181{,}600$ (1)

• Brokerage buy $= \min(0.03\%\times 90000, 20) = \min(27, 20) = ₹20$ (1)
• Brokerage sell $= \min(0.03\%\times 91600, 20) = \min(27.48,20) = ₹20$ → total brokerage $= ₹40$ (1)
• STT (sell only) $= 0.025\% \times 91600 = ₹22.90$ (1)
• Exchange txn $= 0.00297\% \times 181600 = ₹5.3935 \approx ₹5.39$ (1)
• SEBI $= 0.0001\% \times 181600 = ₹0.1816 \approx ₹0.18$ (1)
• Stamp (buy only) $= 0.003\% \times 90000 = ₹2.70$ (1)
• GST $= 18\% \times (40 + 5.3935) = 18\% \times 45.3935 = ₹8.1708 \approx ₹8.17$ (1)

Total charges $= 40 + 22.90 + 5.39 + 0.18 + 2.70 + 8.17 = ₹79.34$ (1)

Gross profit $= (458-450)\times 200 = ₹1600$. Net profit $= 1600 - 79.34 = ₹1520.66$ (1)

(Accept ₹1520.64–1520.66 depending on rounding order.)

(b) Symbolic model (8 marks)

Let turnover per leg $= np$ (same price both legs). Total turnover $= 2np$. (1)

Brokerage per leg $= \min(0.0003\,np,\ 20)$; total $B = 2\min(0.0003\,np,20)$. (2) The cap binds when $0.0003\,np \ge 20 \Rightarrow np \ge ₹66{,}666.67$. (2)

Other charges (turnover-based):

• STT $= 0.00025\,np$ (sell side)
• Exch $= 0.0000297\cdot 2np = 0.0000594\,np$
• SEBI $= 0.000001\cdot 2np = 0.000002\,np$
• Stamp $= 0.00003\,np$ (buy side)
• GST $= 0.18(B + 0.0000594\,np)$ (2)

$C(p,n)=B+0.00025np+0.0000594np+0.000002np+0.00003np+0.18(B+0.0000594np)$ $\boxed{C=1.18\,B + np\big(0.00025+0.0000594+0.000002+0.00003\big)+0.18(0.0000594np)}$ Simplify turnover coefficient: $0.00025+0.0000594+0.000002+0.00003 = 0.0003414$; plus GST on exch $0.18\times0.0000594=0.0000106920$. $\boxed{C(p,n)=1.18\,B + 0.0003520920\,np}\quad B=2\min(0.0003np,20)$ (1)

(c) Break-even move (6 marks)

For $n=200$, $p=450$: buy leg turnover $=90000$; here cap binds on buy ($0.0003\times90000=27>20$). Using symbolic per-leg but sell price $=p+\Delta$; both legs near ₹90k so both brokerage capped at ₹20 → $B=40$. (1)

Break-even: gross profit = charges. $200\Delta = C$. With turnover using average ≈ buy side, use exact charges structure:

Charges (as functions of $\Delta$, small): STT on sell $=0.00025\cdot200(450+\Delta)$, stamp on buy $=0.00003\cdot90000=2.7$, exch on total $=0.0000297\cdot200(900+\Delta)$, SEBI $=0.000001\cdot200(900+\Delta)$, GST $=0.18(40+\text{exch})$. (2)

Approximate (neglecting $\Delta$ inside charge turnovers, since $\Delta\ll450$): $C\approx 79.34$ from part (a) baseline scaled — actually at $\Delta\to$ break-even charges ≈ ₹79.3. $200\Delta \approx 79.3 \Rightarrow \Delta \approx ₹0.397 \approx ₹0.40 \text{ per share}$ (2)

So a move of about ₹0.40/share (i.e. price $\approx 450.40$) covers costs. (1)

Question 2

(a) Settlement dates & DP charges (10 marks)

Weekend rule: settlement skips Sat/Sun.

• Trade A (Thu sell): T+1 = Friday → INFY 50 debited Friday. DP charge applies (delivery sell). (2)
• Trade B (Fri sell): T+1 falls on Sat → skip weekend → Monday debit. DP charge applies. (2)
• Trade C (Fri buy): T+1 = Monday credit. No DP charge (buy). (2)

DP per scrip $= 13.5 \times 1.18 = ₹15.93$. (2)

• Trade A: 1 scrip → ₹15.93
• Trade B: 1 scrip → ₹15.93
• Trade C: ₹0

Grand total DP = ₹31.86 (2)

(b) Python (10 marks)

def settlement_date(trade_day_index):
    # 0=Mon ... 6=Sun ; T+1 skipping weekends
    d = trade_day_index + 1
    while d % 7 in (5, 6):   # Sat=5, Sun=6
        d += 1
    return d % 7
 
def dp_charge(is_delivery_sell, num_scrips):
    if not is_delivery_sell:
        return 0.0
    return round(num_scrips * 13.5 * 1.18, 2)
 
# Trade A: Thu=3 -> 4=Fri ; B: Fri=4 -> Mon=0 ; C: buy
assert settlement_date(3) == 4    # Fri
assert settlement_date(4) == 0    # Mon
total = dp_charge(True,1) + dp_charge(True,1) + dp_charge(False,10)
print(total)   # 31.86

Marks: settlement_date weekend loop (4), dp_charge GST logic (3), correct demo outputs Fri/Mon and 31.86 (3).

Question 3

(a) DDPI evaluation (8 marks)

• Claim is FALSE / overstated. DDPI authorizes the broker to debit securities from your demat for the specific purposes of settlement of sell trades and pledging for margin — without a per-trade e-sign/OTP each time. (3)
• Counter-scenario (debit without fresh e-sign): trader places a delivery sell order; on settlement the broker uses the DDPI to auto-debit shares from demat to fulfil delivery — no additional authorization step required. This is exactly what DDPI enables. (3)
• Retained-control case: DDPI (unlike old broad POA) is purpose-limited — it cannot be used to move shares to unrelated accounts, sell holdings the client didn't order, or off-market transfers. So control is retained against unauthorized moves, but NOT against auto-debit of the trader's own sell orders. (2)

(b) Ledger reconciliation (8 marks)

Opening balance $= ₹1{,}00{,}000$. (1) Settlement payable (contract-note net) debited $= ₹90{,}250.50$. (2) AMC $= 300 \times 1.18 = ₹354.00$ debited. (2)

Closing $= 100000 - 90250.50 - 354.00 = ₹9{,}395.50$. (2)

Legally binding record: the contract note is the primary legal document evidencing the trade (price, qty, charges, brokerage) issued by the broker; the ledger is a running account summary. The contract note is the enforceable transaction record. (1)

[
  {"claim":"Q1a total charges ≈ 79.34 and net profit ≈ 1520.66","code":"buy_t=200*450; sell_t=200*458; tot=buy_t+sell_t; brok=min(0.0003*buy_t,20)+min(0.0003*sell_t,20); stt=0.00025*sell_t; exch=0.0000297*tot; sebi=0.000001*tot; stamp=0.00003*buy_t; gst=0.18*(brok+exch); charges=brok+stt+exch+sebi+stamp+gst; net=1600-charges; result=(abs(charges-79.34)<0.05) and (abs(net-1520.66)<0.05)"},
  {"claim":"Brokerage cap binds when np>=66666.67","code":"thr=20/0.0003; result=abs(thr-66666.6667)<0.01"},
  {"claim":"DP per scrip = 15.93 and grand total = 31.86","code":"per=round(13.5*1.18,2); total=per+per+0; result=(abs(per-15.93)<0.005) and (abs(total-31.86)<0.005)"},
  {"claim":"Q3b closing ledger = 9395.50","code":"amc=300*1.18; close=100000-90250.50-amc; result=abs(close-9395.50)<0.01"},
  {"claim":"Q1c break-even move ≈ 0.40 rupees/share","code":"delta=79.34/200; result=abs(delta-0.40)<0.02"}
]