Brokers big losers in new CMA laws as listing fees cut

Capital Markets Authority (CMA) has slashed the cost for big firms seeking to list their shares or borrow from the capital market as part of new incentives.

Paul Muthaura CEO Capital Markets Authority

Stock brokers are the biggest losers in the new fees structure that cuts their commission from every transaction.

CMA announced on Friday that the payable fees for corporate borrowing - commonly known as issuance of bonds, has been capped at Sh30 million.

Companies will pay a maximum Sh30 million when seeking approvals to go public, down from 0.15 per cent of the total value of the offer.
The new regulations will benefit companies whose initial public offering is more than Sh20 billion.

“The review of the fees, levies, and commissions was necessitated by the need to ensure financial sustainability of the capital markets sector; and raise levies collected by the Central Depository and Settlement Corporation (CDSC),” said CMA acting chief executive Paul Muthaura.

Transaction levy

CDSC, which is the clearing house for listed securities, has been handed more money from every transaction at the expense of stock brokers in the new regulations.

“The Regulations have also increased the transaction levy charged by CDSC from the current 0.06 per cent to 0.08 per cent of the value of a given transaction,” CMA announced.

Fees earned by stock brokers has been slashed from 1.78 per cent of the transaction vale, to 1.76 per cent. By reflecting that the percentage increase in the CDSC levy is equal to the reduction in brokers’ fees, the cost to investors has not changed.

The amendments to reduce the fees paid by listed companies and new companies applying to list at the point of approval for issue of equity securities, corporate bond issues, capitalisation or rights issue, are already in force through Legal Notice number 35 of 2016.