The Central Depository and Settlement Corporation Limited (CDSC) has announced the suspension of a newly introduced Ksh100 monthly account maintenance fee. The move follows an outcry from investors concerned about the firm making trading at the Nairobi Securities Exchange (NSE) more expensive when the bourse itself is struggling.
The new charge was to take effect in July. Walking back its earlier stance, the CDSC now states that it has been suspended to allow for further talks with stakeholders including the Capital Markets Authority (CMA).
Investors had warned that implementation of the charge would drive retail investors away from the NSE further hurting the bourse. The CDSC had argued that the charge was necessary to keep it financially stable and allow the company to expand its offerings.
But with trade volumes hitting worrying lows and the IPO drought at the NSE in its sixth year, many analysts argue that the new fees would be detrimental to the bourse and market confidence.
Among them was former NSE Chairman Jimnah Mbaru who called for the CDSC to be folded into the NSE.
“The Nairobi Securities Exchange should takeover the CDSC and drop these proposed fees. We need to continue to reduce the costs of trading securities on the exchange. In our small market the CDSC should be the BACKOFFICE of the Trading Floor,” he tweeted on May 17.
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Others created petitions and voiced opposition on social media. CDCS also received numerous queries online on how to close an account after announcing the charges, a spot-check reveals.
While the fee would have applied to all accounts, only 61,000 of the 2.03 million CDSC accounts have traded in the past two years. Majority of the accounts are dormant.
Trading volumes, on the other hand, have tumbled from 7 billion shares in 2017 to 4 million shares traded in 2021.