CDSC suspends new Ksh.100 monthly fee on trading accounts

The Central Depository and Settlement Corporation (CDSC) has suspended the implementation of a new maintenance fee on CDS trading accounts after uproar from the investing public.

While the Corporation had on Tuesday doubled down on the maintenance fee, CDSC has seemingly now eaten a humble pie after widespread rejection of the proposed levy.

The Ksh.100 monthly fee had taken effect Monday after what the CDSC said was a 60-day consultation with stakeholders.

“With regard to the CDS account maintenance fee, CDSC would like to announce that it has entered into further consultations with the Capital Markets Authority (CMA) and other stakeholders,” CDSC said in a statement on Wednesday.

“We will advise all CDSC account holders and our agents on the way forward in due course. In the meantime, the status quo before the reference communication on the same remains.”

On Tuesday, CDSC Chief Executive Officer Nkoregamba Mwebesa said the proposed fee would ensure the Corporation’s financial sustainability while allowing it to support new products such as securities, lending and borrowing.

“We want to be very equitable and very fair to all of our shareholders, but we can only do that if we remain financially sustainable and are able to maintain our costs,” he said.

Analysts however slammed the move saying it would spell more doom for trading in the domestic market at a time when Kenyan equities are already bleeding from heavy portfolio exits by foreign investors.

“The fee is counter-productive to market development. We are currently in a bear market, the new charge will only serve to subdue retail investor participation,” noted Abojani Investments founder Robert Ochieng.

Data from the CDSC shows 1.64 million CDS/trading accounts as of the end of March 2022, 1.2 million of which are dormant.

Only 56,214 accounts traded during the first three months of the year.

The implementation of the maintenance fee would have seen the CDSC mobilize revenues of up to Ksh.2 billion per year.