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Friday, August 04, 2000

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OTCEI Securities fees slashed

Nilanjan Dey

CALCUTTA, Aug. 3

THE Over The Counter Exchange of India (OTCEI) has gone in for a major rationalisation in the fee structure pertaining to OTCEI Securities Ltd (OSL).

The fee-related decisions were taken at a recent board meeting, according to Mr. Praveen Mohnot, who took over as Managing Director of OTCEI and OSL on August 1.

The decisions relate to adjustment of permitted fees for members/dealers seeking activation on OSL, reduction of annual fee for sponsors/members and lowering of transfer fee.

Currently, all members/dealers are required to pay dues to the exchange (including permitted fee) before they apply for registration as sub-brokers of OSL to trade on the capital market segment of the National Stock Exchange.

These measures, aimed at reducing the financial burden on members, are expected to result in three things: One, they would prompt members to participate on NSE's capital market segment. Two, they would activate counters for trading on OTCEI itself. Three , they would enthuse sponsors/members to bring new issues to the exchange.

Members/dealers who have not paid the permitted fee to OTCEI and want to get activated on OSL alone, would not be required to pay it upfront, the exchange has ruled. Those who have opted for trading in the permitted segment (either through part-payment o r under the deferment plan) would be required to clear their dues.

Such members, however, would get an adjustment to the extent of fee paid, towards the minimum base deposit of Rs. 5 lakhs (payable to OSL for the purpose of trading exposure limit). Those who have made full payment towards permitted fee would also get an adjustment to the extent of payment made, towards the minimum base deposit of Rs. 5 lakhs.

The above benefits, the exchange has informed, would be allowed till the time the members/dealers remain active on OSL. Permitted fee already paid or to be paid would not be refunded in case they stop trading.

The transfer fee of Rs. 1 lakh has been slashed to Rs. 10,000 in all cases of transfer, including transfer by way of sale/change in dominant shareholding. The annual fee for sponsors/members has been reduced from Rs. 10,000 to Rs. 5,000. This would stand ardise the annual fee applicable to sponsors, members and dealers (a uniform Rs. 5,000).

In case of transfer of rights, the transferee would remit to the exchange the differential between the non-refundable fees already paid by the transferor and the present fee structure. The latter is Rs. 24 lakhs for members and Rs. 10 lakhs for dealers.

Mr. Mohnot told Business Line that the exchange would fulfill investors' expectations by being a niche market. The major issues before it would be discussed internally, and the exchange would soon come out with specific plans.

According to Mr. J. H. Bosco, who has gone back to NSE after a three-year stint with OTCEI, the latter was not an ordinary exchange as it was conceived for different reasons. Ideally, it should not be an exchange for the Reliances or the Infosyses of th e world. Instead, it should appeal to companies for which value must be created, Mr. Bosco observed.

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