SECP Reduces Regulatory Tariffs to Make The Capital Market More Competitive

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

According to the press release, this will foster the capital market development and broaden the investor base.

SECP had advised the CDC and NCCPL to rationalize their respective tariff structures, in line with international best practices. Subsequently, to benefit the shareholders and encourage investments, the board of directors of both companies issued SROs, announcing a significant reduction in their tariff structures, said the 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 annual fee of redeemable securities has also been reduced by almost 70% to support the corporate debt market.

SECP has also approved a reduction in custody fee for the next two years by 14% and 16% for 2020 and 2021. In addition, the commission has advised CDC to reduce the ceiling on fresh issuance fee for issuers to Rs. 35 million from Rs. 50 million.

Moreover, the NCCPL has reduced the fee and charges for Collective Investment Schemes (CIS). The reduction will directly benefit mutual funds unitholders, as it will reduce the expense ratio of a fund significantly. CCPL has reduced its UIN maintenance fee by 50%. Other than that, a 20% reduction has 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. In order to improve volumes in the leveraged market; Margin Financing transaction fee applicable on finances has been removed.

The reduction in regulatory charges will further minimize the investor related costs in different segments of equity and debt market and make it a more competitive investment avenue. SECP is striving to introduce measures for simplifying and reducing the cost of doing business to facilitate investors and to improve their confidence in the capital market of Pakistan.

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