Wednesday, July 20, 2016

Broker commission slashed by almost half

The capital market regulator has nearly halved brokerage commission for trading of share and securities in the stock market. It has reduced the brokerage commission on share and bond transaction by maximum of 40 per cent.
According to the Securities Board of Nepal (Sebon), stockbrokers will now charge a maximum of 0.60 per cent and minimum of 0.40 per cent service fee. Earlier, they used to charge from minimum 0.7 per cent to maximum 1 per cent commission on transaction of shares and bonds.
The brokerage commission for transaction of shares up to Rs 50,000 has been brought down to 0.6 per cent from existing 1 per cent. Likewise, commission for transaction between Rs 50,000 and Rs 500,000 have been reduced to 0.55 percent from current 0.9 percent.
The brokerage will charge 0.60 per cent on sales or purchase of shares of up to Rs 50,000 in value, the board said, adding that the stockbrokers cannot charge service fee of over 0.55 per cent of the transaction value on sales or purchase of shares worth over Rs 50,000 to up to Rs 500,000. "Earlier, the brokerage used to charge 0.9 per cent commission of the transaction value worth over Rs 50,000 to up to Rs 500,000."
The service fee for sales or purchase of shares worth over Rs 500,000 to up to Rs 2 million has been fixed at 0.50 per cent of the transaction value, while service fee for sales or purchase of shares worth over Rs 2 million to up to Rs 10 million has been fixed at 0.45 per cent of the transaction value. The service fee for sales or purchase of shares worth over Rs 10 million has been fixed at 0.40 per cent of the transaction value.
Amending the Securities Businessperson (Stock Broker, Securities Dealer and Market Maker) Regulations 2008, Sebon had presented the proposal to the ministry for approval some 18 months ago. The Finance Ministry has today approved the amendments proposed by the Securities board.
After getting approval from the ministry, the Sebon has directed Nepal Stock Exchange (Nepse) to bring the new fees into immediate effect. However, the new rates will come into effect only after Nepse enforces it.
The decision to bring down brokerage charges has come in the wake of complaints from the investors that such commission was the highest in South Asia. Though decline in commission reduces brokerage's income directly, the lower commission rate will increase transactions and attract new investors which can counterbalance our revenue.
The board has also revised service fees on transaction of securities other than shares issued by companies and sovereign bonds issued by central bank or other government agencies. The service fee has been revised downwards to 0.30 per cent of the transaction amount on sales and purchase of such securities worth up to Rs 500,000. If the transaction amount of such securities stands at over Rs 500,000 to up to Rs 5 million, then service fee cannot exceed 0.25 per cent of the transaction amount, the board added. "If transaction value of such securities stands at over Rs 5 million, then the service fee of 0.20 per cent of the transaction amount should be imposed."
"The rates had not been reviewed for the last eight years," chairman of Sebon Rewat Bahadur Karki said, adding that implementation of automated trading system has nearly doubled turnover in recent days. "We decided to review the rates and bring it down so that the transaction costs become cheaper."
The board also decided to reduce the rate to encourage investors to come to the market and provide more liquidity," he added.
The investors have welcomed the move, saying that it will provide additional financial incentive for trading, and the trading will see increment in the days to come.


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