Central Depository and Settlement Corporation (CDSC) has suspended plans to introduce account maintenance fees following a backlash from a cross-section of stakeholders and investors in the sector.

“With regard to the CDS account maintenance fee, CDSC would like to announce that it had entered into further consultations with the Capital Markets Authority and other stakeholders. We will advise CDSC account holders and our agents on the way forward in due course,” CDSC said in a statement.

Disappointed investors

“In the meantime, the status quo before the reference communication on the same remains,” the statement reads.

Earlier on analysts who spoke to Business Hub had expressed disappointment with the move saying the fees are not justified and that the current market downturn cannot be used to justify an increase in fees or charges on investors.

“CDSC’s earnings are tied to the business, a market or lack of by account owners means they lose. New products like SLB and maintenance fees are temporal solutions with no justification for the latter,” Kasiva Mutisya, analysts at Stanbic Bank.

This after the CDSC informed investors through text messages that they will be required to pay Sh100 every month to maintain their accounts.

Seen as a way to reduce the gap left by declining activities at the bourse as investors move out of the market over elections and global recession concerns, however, others maintain it is a bad move.

Reduce the cost of trading

“The Nairobi Securities Exchange should takeover the CDSC and drop these proposed fees.We need to continue to reduce the costs of trading securities on the exchange. In our small market the CDSC should be the back office of the trading floor,” said Dyer and Blair chairman Jimnah Mbaru.

Currently, the country has about 1.1 million accounts at the CDSC meaning that they were to collect and Sh1.2 billion a year. This is nearly three times the revenue it collects every year.

The corporation realised Sh335 million in revenues in 2019 from tradings processed.