Regulatory tariffs reduced significantly to make capital market more competitive

September 23, 2019

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Tariff for annual fee of redeemable securities have been reduced by almost 70 per cent to support corporate debt market. — AFP/File
Tariff for annual fee of redeemable securities have been reduced by almost 70 per cent to support corporate debt market. — AFP/File

The Securities and Exchange Commission of Pakistan (SECP) on Monday announced that it has approved a revision in tariff structures of the National Clearing Company of Pakistan Limited (NCCPL) and the Central Depository Company of Pakistan Limited (CDC).

According to a press release issued by the commission, the decision was taken to foster capital market development and broaden the investor base.

"The SECP had advised the CDC and NCCPL to rationalise their respective tariff structures in line with international best practices. Subsequently, to pass on maximum benefit to the shareholders and encourage investments, the board of directors of both companies issued SROs [statutory regulatory orders], announcing significant reduction in their tariff structures," read the statement.

Read more:SECP eases mutual fund rules

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 SECP said.

Tariffs for annual fee of redeemable securities have also been substantially reduced by almost 70 per cent to support the corporate debt market. The SECP has also approved reduction in custody fee for next two years by 14pc and 16pc for 2020 and 2021, the release said.

In addition, the SECP has advised CDC to reduce the ceiling on fresh issuance fee for issuers to Rs35 million from Rs50mn.

Similarly, the NCCPL has reduced the fee and charges for Collective Investment Schemes (CIS).

"The reduction will directly benefit mutual funds unit holders, as it will reduce expense ratio of a fund significantly," the statement said.

Moreover, CCPL has reduced its UIN maintenance fee by 50pc. Besides, 20pc reduction has been announced in the monthly Institutional Delivery System (IDS) fixed fee and IDS transaction fee for CISs.

"Annual capital gain tax fee has also been reduced for small local investors. In order to improve volumes in leveraged market, margin financing transaction fee applicable on finances has been completely abolished," the regulator said.

"The reduction in regulatory charges will further minimise investor-related costs in different segments of equity and debt markets 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."