SEC Directive Revises Colombo Stock Exchange Transaction Fees
Summary
The Securities and Exchange Commission of Sri Lanka has issued a directive revising share transaction fees for the Colombo Stock Exchange (CSE) and Central Depository Systems (CDS). The changes introduce a step-up fee structure and increase the threshold for the two-band fee structure, effective March 15, 2017.
What changed
The Securities and Exchange Commission of Sri Lanka (SEC) has issued a directive, effective March 15, 2017, revising the share transaction fees for the Colombo Stock Exchange (CSE) and Central Depository Systems (CDS). The directive mandates a shift from a flat fee structure to a step-up fee structure for calculating fees based on transaction value. Additionally, the threshold for the two-band fee structure has been increased from Rs. 50 million to Rs. 100 million. This change aims to create a more equitable fee system, where higher-value transactions incur proportionally lower fees.
Licensed stock brokers and dealers trading in equity securities are directed to comply with the new fee structure when paying CSE and CDS fees. This directive impacts how transaction costs are calculated and paid, requiring brokers and dealers to update their systems and processes to reflect the new step-up fee model and the revised threshold. Failure to comply could result in regulatory action by the SEC.
What to do next
- Implement the revised step-up fee structure for CSE and CDS transaction fees by March 15, 2017.
- Ensure all licensed stock brokers and dealers comply with the new fee structure for equity security transactions.
- Update internal systems to accurately calculate fees based on the new two-band structure with the Rs. 100 million threshold.
Source document (simplified)
SEC logo
SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA
Sri Lanka state emblem
ශ්රී ලංකා ආදායම් මණ්ඩලය සහ විකිණුම් කොමිසම ලංකාව இலங்கைப் பிணையங்கள் மற்றும் பரிவர்த்தனை ஆணைக்குழு
Handwritten: N/P, Circulate, 08/02
Ref: SEC/LEG/17/02/01
BY HAND
3rd February 2017
To: The Colombo Stock Exchange/Central Depository Systems (Pvt) Ltd and all licensed Stock Brokers and/or Stock Dealers of the Colombo Stock Exchange trading or dealing in Equity Securities
DIRECTIVE ISSUED UNDER SECTION 13 (C) OF THE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA ACT NO. 36 OF 1987 (AS AMENDED)
RE: REVISION OF SHARE TRANSACTION FEES OF THE COLOMBO STOCK EXCHANGE (CSE) AND CENTRAL DEPOSITORY SYSTEMS (PVT) LTD (CDS)
The Securities and Exchange Commission of Sri Lanka (SEC) at its 381st meeting held on 10th January 2017 considered a request from the CSE to review the transaction fees applicable to CSE and CDS which are currently in force by:
- a) adopting a step-up fee structure rather than the present flat fee structure when consolidating transactions for the purpose of computing fees; and b) increasing the threshold for the two-band fee structure from the present Rs. 50Mn to Rs. 100Mn.
The basis for the request was that levying fees on a 'flat' basis is not equitable since transaction fees payable on a marginally lower turnover is higher than fees payable for a marginally higher-value transaction.
The Commission having deliberated on the proposal put forth by the CSE approved the transaction fee structure which appears in the Annexure hereto.
The CSE and the CDS are hereby directed to levy the CSE and CDS fees with regard to all share transactions carried out at the CSE in accordance with the table appearing in the Annexure.
All licensed Stock Brokers and Stock Dealers trading in equity securities are hereby directed to ensure compliance with the fee structure as depicted in the table appearing in the Annexure, when paying the CSE and CDS fees in respect of all share transactions.
This directive shall be effective from 15th March 2017.
Vajira Wijegunawardane DIRECTOR GENERAL Aa/Nu
RECEIVED stamp dated 06 FEB 2017
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වෙබ් අඩවිය: www.sec.gov.lk www.cmet.sec.gov.lk www.cmic.sec.gov.lk
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ANNEXURE
SHARE TRANSACTION FEES OF THE COLOMBO STOCK EXCHANGE (CSE) AND CENTRAL DEPOSITORY SYSTEMS (PVT) LTD (CDS) WITH EFFECT FROM 15TH MARCH 2017
Share Transaction Fee Structure (to be implemented on a step up basis)
| Transaction Cost Band | Percentage Payable (%) | |
|--------------------------------------------------|--------------------------------|--------------------------------------------------|
| | Transactions ≤ Rs. 100 Million | Transactions > Rs. 100 Million Note 1 |
| Brokerage Fees | 0.6400 | 0.2000 Note 2 |
| CSE Fees | 0.0840 | 0.0525 |
| CDS Fees | 0.0240 | 0.0150 |
| SEC Cess | 0.0720 | 0.0450 |
| Share Transaction Levy imposed by the Government | 0.3000 | 0.3000 |
| Total | 1.1200 | 0.6125 |
Note 1. Illustration of Share Transaction Fee Structure when applied on Step up Basis:
| Transaction Value | (Rs.) | 102 million | | |
|--------------------------|-------|-------------|-----------|-----------|
| | | 100 million | 2 million | Total |
| Consolidated Fees | (%) | 1.1200 | 0.6125 | - |
| | (Rs.) | 1,120,000 | 12,250 | 1,132,250 |
Note 2. Brokerage fees are indicated as a floor brokerage commission; actual fees may exceed this percentage
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