(Bloomberg) -- Shares of Indian brokerages tumbled after stock exchanges were ordered to charge a flat fee for transactions, reducing some firms’ income.

Angel One Ltd., the largest-listed brokerage by clients, sank as much as 11%, while IIFL Securities Ltd. and 5Paisa Capital Ltd. each dropped by at least 5% after the market regulator ordered stock and commodity exchanges to restructure charges.

The Securities and Exchange Board of India on Monday after markets closed issued the new rule barring brokers from taking more money from clients for exchange-related charges than they payout, saying the model is unfair to smaller firms with lower turnover.

“This means all clients have to be charged in a uniform manner,” said Amit Kumar Gupta, chief investment officer at Fintrekk Capital in New Delhi. He expects the changes will erode sales and profitability of brokers with heavy volumes.

The new rules will take effect from Oct. 1, ending a tiered structure under which brokers get discounts from exchanges based on the volume of transactions.

Following the rule change, “we will, in all likelihood, have to let go of the zero brokerage structure and/or increase brokerage for F&O trades. Brokers across the industry will also have to tweak their pricing,” Nithin Kamath, the chief executive officer of Zerodha Broking Ltd., one of India’s largest online brokerage, said in a post on X.

(Updates with comments from a brokerage founder in the last paragraph.)

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