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Wednesday, Jan 28, 2004

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SEBI panel moots lower demat charges for small investors

Our Bureau

Mumbai , Jan. 27

IN a bid to reduce the cost of operating dematerialised accounts, a Securities and Exchange Board of India (SEBI) committee recommended that small investors be charged in proportion to the value of the trades and not on a per transaction basis.

The depository participants should not also levy on them account maintenance and demat charges, the committee has suggested.

The report, now placed for public comments, suggests the definition of small investor to be one who buys or sells securities worth Rs 50,000 or less on any business day. There could also be a cap on maximum transaction in a financial year to qualify as a small investor.

Currently, depository participants charge investors on an average, account opening and maintenance fees of Rs 1,700 per year and demat charges of Rs 53 per certificate minimum, over and above transaction charges of 0.05 per cent of value or Rs 20, whichever is higher. This is despite the fact the National Securities Depository Ltd does not charge any account maintenance fees or demat charges from depository participants.

Small investors will be allowed to shift accounts between depository participants without any transaction charges or other incidental charges. Account closure charges shall be collected only if the investor is going out of the demat mode. The report also proposes to make uniform, the charge structure across participants.

In the case of companies, the report has suggested a one-time fee to the depository concerned, at the rate of 0.1 per cent of its market capitalisation or on the basis of number of post shares issued. This will be implemented in a phased manner and SEBI may have to amend listing agreement of the stock exchanges.

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