The Central Depository and Settlement Corporation (CDSC) has made an application to the Capital Markets Authority who is the market regulator in a bid to begin charging stock account holders.
The CMA has indicated that they have received the application from CDSC which will be followed by a 30-day public consultation before the fate of the charge can be decided. In May, CDSC had announced that it would introduce a 100 monthly charge effective July 15.
However, the proposal was suspended the next day after a public outcry, with fears that it will squeeze retail investors whose portfolios are small. If the proposals, had gone through, account holders would have been forced to pay Sh1,200 annually as account maintanance fees which would have led to account closures.
Apparently, the fee was supposed to have been split between the settlement platform and brokers with CDSC getting Sh400 annually while brokers who would collect the charge would have kept Sh800. CDSC insists the new charge would have only been imposed on active accounts that average about Ksh. 60,000 annually which would have meant collecting Sh72 million that would eventually be split between the platform and brokers.
This move to start charging account maintenance fees has been bought about by the fact that equity turnover has dropping over time, closing at Ksh. 137 billion in 2021, this is the lowest it has been since 2012. In the first half of this year, investors traded shares worth Sh54.2 billion, pointing to an even lower annual total compared to last year if the trend is maintained in the second half of the year.