Stockbrokers have expressed support for the introduction of regulatory charges on fixed income securities by Securities and Exchange Commission (SEC).
SEC has introduced regulatory fees on Fixed Income (Bonds) secondary market transactions executed on the Securities Exchange for onward transmission to a Depository for settlement, price discovery and corporate disclosure, effective January 1, 2022.
By this fee structure, the SEC will charge 0.025 per cent of the total value of all secondary market transactions on bonds, while the Securities Exchange on which the transaction occurs will charge an amount not exceeding 0.025 per cent of the total value of secondary market transactions on bonds.
In addition, bond transactions by dealing members will attract a single regulatory fee of 0.0001 per cent of the total value of the secondary market transactions on bonds, and are exempt from the 0.025 per cent fee charge earlier stated.
The president, Chartered Institute of Stockbrokers (CIS), Mr Olatunde Amolegbe said, the apex capital market regulator has brought significant regulation to all markets, including the fixed income markets with a view to bringing more sanity to those markets.
According to Amolegbe, there is no issue with the introduction of a regulatory charge on transactions.
However, whether it should be as high as 0.02 per cent is open to discussion. “We cannot ignore the fact that such will definitely increase the net yield on instruments, reduce spreads and might impact trade volumes. I am sure the market ecosystem will ultimately arrive at a point of equilibrium for all participants.”
Also, chairman of Association of Securities Dealing Houses of Nigeria (ASHON), Mr Sam Onukwue said, SEC was in order to introduce regulatory charge on fixed income securities, saying, “I do not think it is out of place for SEC to do so. The Commission has been charging on equities all along.
“The proposed charges on fixed income securities should not discourage investors from the asset class. Investors have their preferences and would always weigh their risk tolerance and other fundamentals in making investment decisions. We have risk takers and risk averters. The former invests more in equity while the latter have strong hold in fixed income securities.”