The Capital Markets Authority earned Sh890 million for the year ending
June 2018, more than half gained from NSE transaction fees.
Investors remitted Sh49.18 million to the regulator for transaction fees at the bourse as at
July 2018, while CMA raised Sh305.51 million from capitalisation, rights and new issue fees, Sh17.44 million from application and licensing fees and Sh12.68 million for market development fees.
The regulator charges NSE transaction fees at a rate of 0.12 per cent of the value of the equities traded and 0.0015 per cent of the value of bonds traded.
Costs related to cash transfers through mobile money and bank transfers following the enactment of the Finance Act 2018 are already driving investors to sell their shares at the NSE as they are being forced to pay more in transaction fees.
CMAs third quarter report shows the equities market shed off Sh21.64 million as investors disposed their shares. The volume of shares traded at the bourse nearly halved in the July-September period to 1.04 million shares compared to 2.02 million shares traded the same period last year.
Under the new law, excise duty charged on mobile money transfers has increased to 12 per cent from 10 per cent while tax on money transfer agencies and other financial service providers increased to 20 per cent from 10 per cent.
“The new provision has now doubled the tax applicable on money transfers and other fees charged by financial institutions and increased the tax on telephone and internet services by 50 per cent,” CMA director, regulatory policy and strategy Luke Ombara said.
He added that the new doubled tax has a direct impact on the cost of executing capital market transactions and ultimately, the level of participation in capital markets.
CMA also charges fees on capitalisation or rights issues at 0.25 per cent of the value of the issue, 0.075 per cent on approval of government securities while new issues are charged 0.15 per cent of the value of the issue.
“Application for license cost Sh2,500 while annual licensing fees are up to a maximum of Sh250,000. Market development fees are charged to listed companies at a rate of 0.01 per cent subject to a minimum of Sh50,000 and a maximum of Sh100,000 per annum,” the regulator stated in its 2017-18 annual report. Surplus payable to National Treasury as at the end of June stood at Sh21.13 million.