Botswana Stock Exchange Limited (BSEL) has announced intentions to revise the local bourse’s equity brokerage commission, following its seemingly biased increase in April 2016.
Indication are that BSE’s equity brokerage commission ceiling of 1.85 percent is one of the highest compared to markets such as Dar Es Salaam Stock Exchange, Stock Exchange of Mauritius and Nairobi Stock Exchange, among others.Thapelo Tsheole, BSEL Chief Executive Officer said the stability of turnover has weakened since the brokerage commission was increased.
He said the development has hindered unlocking value from the investment and the initiatives of the Exchange with respect to the development of the market. “The BSE is not entirely against increasing fees, but is of the view that these increments have to be substantiated by considerable value add from the service providers and should follow an objective and consultative framework that eliminates any perception of conflict of interest particularly as that was the perception at the time the BSE was a mutual entity,” said Tsheole. Sharing BSEL’s concerns on a position paper dubbed: ‘Paper on Revision of the Equity Brokerage Commission’, Tsheole said the benchmarking exercise which was undertaken to review the brokerage commission in 2016 relied on information provided by an interested party - a broker.
He added that the exercise could not have provided an independent and objective analysis for the BSE to make a well informed decision. “The information presented by the broker was not complete and comprehensive and from that end, it selected higher ends (ceilings) of the brokerage commissions to give an impression that brokerage commission in Botswana is very low compared to the chosen markets to support the introduction of the floor.”
The position paper further notes that in most markets, brokerage commission is on a sliding scale, therefore the scales are such that brokerage declines as the value of the transaction increases. “In a few markets, brokerage is negotiable within certain ranges and in some market it is flat,” said Tsheole. BSEL is soliciting for views from brokers, asset managers and all stakeholders, ahead of revising the brokerage commission.