With an aim to further boost retail participation in the debt market, market regulator SEBI revised annual maintenance charges on debt securities held through basic services demat account.
With an aim to further boost retail participation in the debt market, market regulator SEBI revised annual maintenance charges on debt securities held through basic services demat account. The new charges would apply from June 1, 2019.
“Based on representation received from market participants… it has been decided to revise the structure of charges for debt securities,” a Sebi circular said.
No charge would be applicable for debt securities worth up to Rs 1 lakh, SEBI said. For the value of holding more than Rs 1 lakh and up to Rs 2 lakh, Rs 100 would be applied, it added.
Retail investors can avail limited services at reduce cost using Basic Services Demat Account (BSDA).
Rs 100 is levied currently on securities worth more than Rs 50,000 and up to Rs 2 lakh irrespective of holding-type, while no such charge applied on holdings valued up to Rs 50,000.
“The move yesterday is to encourage retail investors, to invest in listed debt. The move is also aimed at creating a liquid and vibrant debt market. This will certainly help in getting small investors to buy debt instruments, many retail investors who wish to buy fixed income assets as part of asset allocation plan or just prefer safety of debt will have an alternative to fixed deposits or debt mutual funds”, said Rajiv Ranjan Singh, CEO Stock Broking, Karvy.
“However, since this may be a new instrument for many small investors, advisors will need to help them understand this investment avenue, hence the impact will be felt in a phased manner, also SEBI may need to do more to encourage participation”, he added.
In 2012, SEBI has directed depository participants (DPs) to make BSDA available for retail individual investors as part of efforts to reduce the cost of maintaining securities in demat accounts.