NSDL revises transaction charges

The National Securities Depository Limited (NSDL) has decided to reduce the settlement fee from Rs 15 to Rs 10 per debit instruction and the settlement fee for the credit instruction will remain unchanged, which attracts no charges at present. The board of directors of the depository met on Friday to reconsider the new set of charges in Mumbai in the wake of the advice given by the Securities and Exchange Board of India (Sebi) to it recently. Besides these changes, the board decided not to effect any changes in respect of other transaction charges and decided to implement the revised fee structure from May 1, 2002. As per the revised fee structure of NSDL, the pledge creation and securities borrowing will be charged at Rs 25 per instruction, custody fee will be levied at Rs 9 per ISIN per annum and rematerialisation will be charged at Rs 10 per instruction. However, for pledge closure and pledge invocation instructions, no charge will be levied by NSDL. Brij Gopal Daga, managing director of NSDL’s rival depository Central Depository Services Limited (CDSL) could not be reached for comment on the NSDL move. It may be recalled that on February 26, 2002, NSDL had announced a revision in its fee structure to the depository participants (DPs). Accordingly, as a follow up, Central Depository Services (I) Limited (CDSL) also announced a revised fee structure which was to be made effective from April 1, 2002. However, Sebi shot down the depositories’ proposal to shift from ad valorem (value-based) charges on transactions to a combination of a flat transaction charge and custodial charges. Sebi chairman GN Bajpai had then said that the boards of the depositories would have to take a final view. The regulator intervened in response to representations it received from small investors stating that the new rates would hurt them. This is one of the rare instances when Sebi has interferred in the commercial decisions of its constituents. However, the regulator is said to have acted to fulfil its responsibility of keeping the charges as low as possible. The average cost under the new proposals of depositories worked out to Rs 25 to Rs 50 per transaction, which is very difficult to convince their clients, DP sources said. This has created an uproar among the small shareholders, whose transactions are mostly in the range of Rs 10,000 to Rs 20,000 each. The small investors have represented against the proposed charge structure of depositories with the Union Finance Minister and Sebi. Depository services are institutions that have made it possible for the small investor to purchase even a single security, which was not possible in the earlier system of physical form of shares. However, the latest move of the depositories was considered to affect this as the small investor who orders for a small value of shares would be put on par with the large investor who makes a purchase/sell order for0000000 of rupees, for charging transaction cost. This amounts to subsidising large investors at the cost of the small, argued the investor associations.