KARACHI: Pakistan Stock Exchange (PSX) on Tuesday proposed to levy regulatory fee to cover costs of the stock exchange including need to increase marketing and investor awareness programs.
The proposed amount of regulatory fee is kept equivalent to the difference of Centralized Customers Protection Compensation Fund (CCPF) Levy presently charged and proposed reduced rate of CCPF Levy so that the brokers end up paying the same amount of levy on their traded value.
The PSX further said that the proposed fee to be charged to TRE Certificate Holders on the basis of per Rs100,000 value of trade would be equivalent to the amount by which the existing levy is proposed to be reduced under the another proposal of reduction in rate of levy collected from TRE certificate holders based on the value of securities traded at PSX and contributed in CCPF.
“This effectively means that the TRE Certificate Holders would continue to pay same amount of levy per Rs100,000 value of trade as is presently applicable at the rates specified in Schedule – I of Chapter 24 of PSX Regulations.
The only change PSX is proposing that such collected levy should be bifurcated into two categories i.e. one for CCPF contribution at Re0.01 and the remaining to be retained by PSX as a regulatory fee for meeting regulatory expenses as:
(i) Regulatory Fee for Ready Market: 0.67084 – 0.01 = 0.66084 per 100,000 trade value.
(ii) Regulatory Fee for other Markets: 0.93809 – 0.01 = 0.92809 per 100,000 trade value.
The PSX made another proposal for reduction in rate of levy collected from the certificate holders based on the value of securities traded at PSX and contributed in CCPF:
Presently, all TRE Certificate Holders are required to contribute in CCPF at the following rates specified in Schedule-I of Chapter 24 of PSX Regulations:
TABLE
| Market Name | Rate in Pak Rupee [Per 100,000 value of trade] |
| Ready Market Trade | 0.67084 |
| Odd Lots Market Trade | 0.93809 |
| Deliverable Futures Contract Market- contract | 0.93809 |
| Cash-Settled Futures Contract Market-contract | 0.93809 |
| Stock Index Futures Contract Market-contract | 0.93809 |
| Squaring-Up Market-trade | 0.93809 |
| Negotiated Deals Market- transaction | Nil |
| Debt Market – Trades | Nil |
PSX is proposing to reduce the rate of levy collected from TRE Certificate Holders as a contribution to CCPF to PKR 0.01 per PKR 100,000 value of trade executed in different markets as mentioned above based on the following reasons:
1. The CCPF has attained adequate size at the current level. As of audited statements of June 30, 2020, size of CCPF is PKR 3,985,384,043. Even with reduced rates of levy collected from TRE Certificate Holders, CCPF will continue to grow further with the support of earnings of treasury income on invested assets of CCPF;
2. The size of CCPF has grown faster as compared to the actuarial assessment due to the following factors:
(i) Lesser utilization of CCPF due to lower cases of defaults in recent past;
(ii) No outflow is made from CCPF on account of Management Fee;
(iii) Expected increase in treasury income due to anticipation of better interest rates; and
(iv) The current size of CCPF, which is over PKR 4 billion, is sustainable at its current level. This allows lesser contribution from TRE Certificate Holders.
In order to give effect to the above proposals, PSX is proposing to make the following regulatory amendments, which are attached herewith as Annexure A in a comparative format.
Proposal (A) requires amendments to Schedule 1 of Chapter 24 of PSX Regulations whereby the existing rates of levy for different markets are proposed to be reduced to PKR 0.01 per PKR 100,000 value traded.
Proposal (B) requires amendments to Schedule of Charges notified by PSX under clause 3.4 of PSX Regulations whereby a new “Regulatory Fee” schedule is proposed to be inserted to cover cost of regulatory functions and investor awareness programs and marketing campaigns of PSX.
Pursuant to Section 7(3) of the Securities Act, 2015, all concerned are invited to provide written comments on the proposed amendments by Tuesday, January 12, 2021.
