DEMAT A/CS TO BE FREE FROM FEB 1ST

In a bid to reduce the transaction cost for small investors, Sebi has said that investor will not have to pay any account opening charges and charge for credit of securities to depositories from February 1 '05.

Sebi has also said that no custody charge shall be levied by depository on any investor who would be opening account after February 1, 2005 and also from April 1, 05 the custody charges shall not be levied on any investor. Sebi said that it received representations from investors seeking a reduction in the charges paid by them for dematerialisation of securities. The rationalisation of charge structure for dematerialisation was discussed at the Secondary Market Advisory Committee of Sebi.

However, the depositories ma levy and collect the charges towards custody from the issuers, on a per folio (ISIN position) basis as at the end of the financial year, according to a Sebi circular.

Under the rate fixed b Sebi, annual custodial fee payable by an issuer to each depository would be as follows up to 5 crore Rs 4,000, above 5 crore and upto 10 crore Rs 10,000 and above 10 crore and upto 20 crore Rs 20,000 and above 20 crore Rs 30,000.

The issuers would be required to pay custody charges to the depository with whom they have established connectivity based on the total number of folios (ISIN positions) as on March 31 of the previous financial year or the minimum amount, as the case may be, by April 30 of the each financial year failing which depositories may charge penal interest subject to a maximum of 12% per annum.