By Dennise Williams, Staff reporterTHE JAMAICA Stock Exchange (JSE) and the their subsidiary, the Jamaica Central Securities Depository (JCSD), have changed their fees with effect from January 1.
The JCSD is a facility for holding securities that enables share transactions to be processed by book entry. It replaces the former system of issuing certificates.
The fees charged by the JSE and JCSD cover a range of services involved in processing the movement of shares on the stock exchange such as registering a trade and depositing the shares in their vault. The JSE published the new fees in the local media.
EFFECTS OF INFLATION
"The adjustments are meant to cover the effects of inflation," said JSE general manager Wain Iton. He said it was wiser to make small annual adjustments than bigger multi-year ones.
The fees which now range from $100 to $200 will, in January, range from $110 to $400.
Not all fees have been increased. The deposit fees for the first 10 certificates per deposit has been reduced from J$60.00 to J$55.00, which represents an 8 per cent decrease.
In relation to decreases in fees, a second JSE executive said, "we reduced some things to encourage individual and institutional investors to use the depository. Instead of having securities at home or in office, one should come in and deposit with us. This facility speeds up the time in which the investor can then convert equity into cash."
But equity traders say the JSE should embark on a strategy to increase their earnings by increasing volumes traded.
"What I would love is for the fees to go lower," one prominent New Kingston equity trader told Wednesday Business. "Say an investor instructed me to buy 100,000 shares of Bank of Nova Scotia at $22.50 today. You are not going to get all the shares in one trade, sometimes its takes 15 or 100 different trades to execute the deal and each one of those trades costs me $100, and in January it will cost me $110."
TRANSACTION COST
For the small investor with $5000, even if the trade is done in one transaction, the fee pushes up his transaction cost, the trader said. "The JSE should eliminate the fees for trades under $5 million. It is a deterrent for small investors."
Leo Williams, managing director of JMMB Securities said, "I would love to see the fees higher on large trades because the fee of $400 on a $10 million trade is nothing. But people buying $10,000, $20,000 worth of trades should see their fee reduced further."
Said Mr. Williams, "if fees are slashed by 50 percent in conjunction with other measures, it should increase volume and this would drive the profitability of the JSE."
Despite the fee adjustments, the New Kingston equities trader said transaction costs were still lower for stocks than for investments such as fixed deposits with its withholding taxes and real estate where there are stamp duties and transfer taxes.
