SECP approves new tariffs structure to broaden PSX investor base

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Monday approved revision in tariff structures of the National Clearing Company of Pakistan Limited (NCCPL) and Central Depository Company of Pakistan Limited (CDC) to foster capital market development and broaden investor base.

The SECP said the reduction in regulatory charges would further minimise the investor related costs in different segments of equity and debt market and make it a more competitive investment avenue.

“The SECP is continuously striving to introduce measures for simplifying and reducing the cost of doing business to facilitate investors and bringing confidence in capital market in Pakistan,” it said in a statement.

As per revised tariff structures, the sub-account maintenance fee of sub-account holders maintaining investor accounts with CDC has been waived off. “This will encourage investors to open sub accounts with CDC to have prudent and safe custody of their investments,” the commission said.

Tariff for annual fee of redeemable securities have also been substantially reduced by almost 70 percent to support corporate debt market. Further, the SECP has also approved reduction in custody fee for next two years by 14 percent and 16 percent for 2020 and 2021.

In addition, the SECP advised CDC to reduce ceiling on fresh issuance fee for issuers to Rs35 million from Rs50 million. Moreover, the NCCPL reduced the fee and charges for collective investment schemes. “The reduction will directly benefit mutual funds unit holders, as it will reduce expense ratio of a fund significantly,” the SECP said.

NCCPL further reduced its unique identification numbers maintenance fee by 50 percent. Besides, 20 percent reduction has been announced in the monthly institutional delivery system (IDS) fixed fee and IDS transaction fee for CISs. Furthermore, annual capital gain tax fee has also been reduced for small local investors.

Margin financing transaction fee applicable on finances has been completely abolished to improve volumes in leveraged market. The SECP advised the CDC and NCCPL to rationalise their respective tariff structures in line with international best practices. Subsequently, the board of directors of both companies issued statutory regulatory orders, announcing significant reduction in their tariff structures, to pass on maximum benefit to the shareholders and encourage investments.

The commission took a score of measures and introduced reforms to revive the Pakistan Stock Exchange (PSX) that has lost more than Rs2.5 trillion in the capital market since June 2017. The News analysis of the stock market data available at the PSX website showed that a total of Rs2.630 trillion has been wiped from the market since June 2017. Most notably, Rs1.758 trillion i.e. 67 percent of the total losses have been incurred in the first 10 months (August 17, 2018 to May 13, 2019) of Pakistan Tehreek-e-Insaaf-led government.

Stock market expert and a leading businessman Arif Habib believed that the stock market had to pay heavy price due to political uncertainty and government’s inability to take timely decisions. He also attributed the decrease in the market capitalisation to factors, including higher interest and exchange rates.

The SECP earlier this month allowed stock investors to take loans for up to six months from financial institutions to buy shares in a bid to boost liquidity in the wilting capital market.