CDC slashes tariff to aid capital market

Waives transaction fee on corporate action, cuts tariffs for mutual funds

KARACHI:

Central Depository Company (CDC) has further slashed the base tariff for its major depository services to reduce the cost of doing business in the capital market.

The decision was “in line with the vision to facilitate capital market participants and the guidelines of Securities and Exchange Commission of Pakistan (SECP)”, according to a statement issued by the company.

Processing charges for induction have been slashed by 50% to facilitate the induction of physical share certificates and promote digitalisation.

Likewise, the transaction fee on corporate action has been 100% waived to support leverage products, and certain tariff items for mutual funds have also been reduced.

“Since its inception, CDC has reduced its tariff considerably on transactions, and even last year, it reduced the tariff for asset management companies,” the statement said.

“For the last three years, CDC has been consistently reducing its tariff structure.”

Talking to The Express Tribune, Arif Habib Limited Head of Sales Saad bin Ahmed said, “From the investors’ perspective, this is not a significant cost that could have a material impact on their decision in listing or investing in a scrip, however, taking these charges to minimum levels bring us at par with global practices.”

With this new incentive, international investors will gain confidence in Pakistan’s market.

“Digitalisation of the custodian process does facilitate CDC investor account holders and help them monitor their portfolio holdings with just the click of a button,” he said.

Commenting on the fee reduction, CDC CEO Badiuddin Akber said that despite the pandemic-induced circumstances, CDC had undertaken tariff reductions to pass on the benefits to market players.

“The decision is in line with CDC’s strategy of reducing cost of doing business and facilitating all market players, including brokers, asset management companies and most importantly, investors,” he said.

He thanked the SECP for encouraging the company to undertake reforms to enhance ease of doing business and make tariff reductions in order to facilitate the market participants.

“It has been CDC’s endeavour to provide efficient and cost-effective services to all its participants and rationalise its tariff over the period,” he said.

“CDC’s board and management have always put greater emphasis on passing on the benefit of increased transaction volume and economies of scale to investors by substantially reducing its tariff over the years, which has been acknowledged and appreciated by all market players and the SECP.”

Published in The Express Tribune, October 6^th, 2021.

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