NSDL cuts charges below CDSL level

MUMBAI, JULY 19: The National Securities Despository Ltd NSDL, the first share depository to kick off operations in India, has lowered ...

MUMBAI, JULY 19: The National Securities Despository Ltd NSDL, the first share depository to kick off operations in India, has lowered its charges across the board, bringing them below the rates being charged by Central Depository Services Ltd CDSL.

NSDL has reduced various rates like custody charges, transaction charges and off-market rates. With this, operating in NSDL rates will become much cheaper than CDSL which was inaugurated by Finance Minister Yashwant Sinha with much fanfare last week. CDSL, promoted by the Bombay Stock Exchange, is yet to achieve connectivity with NSDL.

NSDL 8211; which introduced paperless electronic trading in the country three years ago 8211; has revised its charge structure by setting up an upper ceiling for the depository participants DP having different average custody values. The charge would thus be one basis point per annum as per the present structure or the ceiling amount whichever is lower.

For average custody value during the quarter upto Rs 200 crore, the annualceiling would be Rs 25,000. For Rs 200-500 crore, the ceiling would be Rs 50,000. Similarly, for average custody value of Rs 500 crore to Rs 2,000 crore, the custody charges would be Rs 1,25,000 while for custody value of above Rs 2,000 crore, the charges would be Rs 4 lakh.

NSDL said in a statement that the above revision will bring substantial benefits to the market. For example, a DP with 10,000 clients and a custody value of less than Rs 200 crore would pay Rs 2.50 per client per annum, which works out to 20 paise per client per month. Thus a DP with 1.50 lakh accounts will not be required to pay more than Rs 2.60 per client per annum even at the highest slab.

It has also revised the transaction charges. The charge will now be two basis points on the value of net delivery given by a clearing member and two basis points on the value of net delivery received. NSDL was earlier charging four basis points on the value of delivery received by a clearing member. 8220;This is a restructuring of the existingtransaction charges and it does not create any additional burden on the market,8221; it said in a statement. On the off-market charges, the NSDL is presently charging 10 basis points on the value of transaction for the account credited. It will now charge two basis point each for the accounts that are credited and debited. The new rate structure will come into effect from August 1, 1999.8220;NSDL does not charge for account maintenance and will continue its policy,8221; said a press statement. The new rates are expected to boost volumes and bring more investors to the dematerialised trading system. NSDL said that since the last review has been carried out in February 1999, the transaction volume has increased substantially and the first quarter of this year has seen the growth trend continuing. At present, NSDL has more than 8.5 lakh retail accounts and the value of the shares dematerialised has crossed Rs 1,50,000 crore as against 3 lakh investor accounts and Rs 95,000 demat value in February 1999. On an average, 65per cent of the settlements on the major stock exchanges are carried out now in demat form as against 35 per cent in February 1999. Hence, the need to charge a higher charges.

According to NSDL, 438 companies have already signed up with the depository to dematerialise their shares. The number of such shares immobilised amounts to 8783 million valued at a whopping Rs 159,800 crore 37 billion. The market capitalisation of these firms works out to Rs 4,37,000 crore 101 billion. The NSDL move to bring down various charges is likely to upset the calculations of CDSL officials. CDSL was earlier projecting itself as a depository which was offering cheaper rates for investors.