By Adedapo Adesanya
Like on the Nigerian Stock Exchange (NSE), the trading of equities on the NASD Over-the-Counter (OTC) Securities Exchange attracts some certain fees charged for the completion of any transaction.
These fees are charged by the exchange, the Securities and Exchange Commission (SEC), the Central Securities Clearing System (CSCS) and the stockbroker through which the trade is done.
To ensure transparency and uphold the integrity of the capital market, the apex regulator in the sector, SEC, has approved maximum charges these bodies can get from execution of any buy or sell transaction on the NASD.
In the template obtained by Business Post, to purchase equities on the NASD Exchange, the platform takes 0.25 percent of total value of the shares purchased by an investor. In addition, the buyer of the securities pays an extra 5 percent Value Added Tax (VAT). This amounts to a total of 0.2625 percent fees charged by NASD on the transaction.
Also, SEC is entitled to a 0.20 percent fee on the same buy transaction with no VAT charged this time.
In addition, the brokerage firm, which helps in the purchase of the equities, charges not more than 1.350 percent of the total value of the securities being purchased by the investor, with another 5 percent VAT charged. This then amounts to a total of 1.4175 percent.
What this now means is that to purchase shares on the NASD Exchange platform, you will be required to pay a total of 1.88 percent of the total value of the transaction.
To illustrate this better, if an investor buys shares worth N100,000 through a stockbroker on NASD, he would need to pay N1,880 extra as purchasing fee to the exchange, SEC and the broker, with N262.50 going to NASD, N200 to SEC and the remaining N1417.50 given to the brokerage company.
Now, to sell your shares on the NASD OTC Exchange, the transaction fee is slightly higher. Hey, before you have a heart attack, the increase is a meagre 0.01 percent.
The NASD, whose platform the trading is carried out, gets 0.25 percent of the total value of the shares to be sold with an additional 5 percent VAT, totalling 0.2625 percent.
However, SEC is exempted from any percentage when a sale order is executed. It means the commission charges no fee for selling your securities.
But the CSCS, which was left out in the buy order, charges 0.20 percent of what you are selling with an additional 5 percent VAT. In all, the agency takes 0.21 percent from the deal.
Also, just like when purchasing, the brokerage gets a total percent capped at 1.350 percent, with a 5 percent VAT which amounts to a total of 1.4175 percent.
In all, an investor is charged 1.89 percent of whatever he plans to sell on NASD by the different bodies.
This means if you want to offload N70,000 from your investment portfolio on NASD, you will need to have N1,323 deducted from the amount, with N183.75 going to NASD, N147.00 to the CSCS and N992.25 to the broker.
Note that from January 2020, VAT would be increased to 7.5 percent. In addition, brokerage fee is capped at 1.35 percent of consideration subject to a minimum charge of N500, while the NASD Alert fee is N4.
Modupe Gbadeyanka