Investors at the Nairobi securities exchange are set to pay a new Ksh 100 monthly charge on stock market accounts that could see the Central Depository and Settlement Corporation (CDSC) collect nearly Ksh 1.8 billion a year.
The new charge, to be introduced in July, will add to the cost of investing on the Nairobi Securities Exchange (NSE) where trades can attract charges of up to two per cent of the transaction value.
“Dear investor, effective July 15, 2022, CDSC will introduce a CDS account maintenance fee of ksh 100 per month payable annually,” CDSC said in a text message to investors.
The charge is set to earn CDSC six times the revenue collected that year of Ksh 308 million which the platform made from charging transactions, deposits, registry fees, and bond levy.
CDSC’s main revenues are earned from transaction levy upon completion of equity and bond transactions in the central depository system where it earned Ksh 238 million in 2020.
It charges each investor 0.08 per cent of each transaction plus 0.01 per cent for the CDSC guarantee fund. Depository levy earned the platform Ksh 16.5 million, registry fees Ksh 4.7 million, bond levy Ksh 27.6 million, and others Ksh 20 million.
The new charge will help the coporation make money from active and idle accounts where the platform was not collecting any revenues from those who do not trade. Idle accounts, mostly held by individuals, stood at 385,411.
However, the new charge on stock investors comes at a time when the market has dropped to a 20-month low on reduced foreign investor participation and capital outflows due to the Russia-Ukraine war that has intensified exits from emerging and frontier markets seen as riskier.