Proposed stock market charge to go through public review – Business Daily
Nairobi Securities Exchange (NSE) CEO Geoffrey Odundo. PHOTO | DIANA NGILA | NMG
The proposed Sh100 monthly stock market account maintenance fee will only be introduced after extensive public participation, stakeholders say.
The Central Depository and Settlement Corporation (CDSC), which offers clearing and settlement services, announced on May 17 that it would introduce the monthly charge effective July 15.
The proposal was suspended the next day after an outcry, with fears that it will squeeze retail investors whose portfolios are small.
CDSC did not say how long the suspension will take. The company said it would engage with regulators and other stakeholders who say any decision on the matter will be made after engaging interested parties.
“We heard what the market reacted to, I think the intention was to provide revenue for the CDSC but we are conscious of the current environment and economic times hence a decision was taken to suspend it,” said Geoffrey Odundo, chief executive of the Nairobi Securities Exchange.
“I can’t give a timeline on how long the suspension is going to be there but all assessment will be done after very extensive consultation including potentially public participation.”
The NSE has a 38.34 percent stake in CDSC.
The new charge would have earned CDSC more than Sh1 billion annually but would have increased the cost of investing at the bourse where trades can attract charges of up to two percent of the transaction value.
Investors said the new charge would lead to a mass exit at the NSE by traders who could not keep up with the levies at the same time barring newbies from taking part in the stock trade.
CDSC had disclosed that some accounts were no longer actively participating in trade at the bourse.
Retail investors who are the majority in the market have been dormant for a while with the CDSC saying nearly 97 percent of equities accounts used for trading at the NSE have lain idle in the past two years.