Regulator set to slap brokers with fines if they halt trading
What you need to know:
- “At this time, neither the authority nor the NSE have issued any directions relating to the suspension of trading at the NSE,” read the statement.
- As individual licensees, the regulator said, the stockbrokers and investment banks had a legal responsibility to render services in accordance with the statutory and regulatory responsibilities attaching to their licences.
- If implemented, the capital gains tax will see NSE investors pay a five per cent tax on gains made from any share sales. The levy also applies to sale of other property such as land, treasuries and private equity.
The Capital Market Authority moved into action to forestall a crisis in the securities exchange after stockbrokers threatened to suspend trading from today until a stalemate on capital gains tax is solved.
The regulator, who called a crisis meeting late in the evening to resolve the stalemate, also threatened to slap the traders with fines if they go ahead to suspend trading.
In response to questions by the Nation on the matter, the regulator said it was the only one with power to halt or suspend trading at a securities exchange. The Nairobi Securities Exchange can halt trading, but only after seeking approval from CMA.
“At this time, neither the authority nor the NSE have issued any directions relating to the suspension of trading at the NSE,” read the statement.
Earlier in the day, the Kenya Association of Stockbrokers and Investment Banks issued a statement saying the council had met and decided to suspend trading from today, until 18th March, 2015, pending a High Court ruling on whether stockbrokers should collect and remit the tax.
“This shall ensure that members uphold the rule of law. It also allows for the creation of an avenue for consultations with the relevant authorities to find a way of complying with the law in its entirety,” said the association.
But in a quick rejoinder, the Capital Markets Authority said stockbrokers had no legal authority to stop trading.
NO LEGAL AUTHORITY
As individual licensees, the regulator said, the stockbrokers and investment banks had a legal responsibility to render services in accordance with the statutory and regulatory responsibilities attaching to their licences.
The crisis meeting was to be attended by stockbrokers, NSE officials and the Central Depository and Settlement Corporation.
This is the latest twist in a fight that has been going on since the government re-introduced capital gains tax into the market in January.
Stockbrokers have maintained that they have no obligation to collect the tax on behalf of the government while the taxman insists that it is their duty. They are also opposed to the implementation of the tax for fears that it could dampen the market.
If implemented, the capital gains tax will see NSE investors pay a five per cent tax on gains made from any share sales. The levy also applies to sale of other property such as land, treasuries and private equity.
Attempts to arrive at an out-of-court agreement have failed. The stockbrokers said they were open to consultations with the relevant authorities, with the aim of finding a way out of the stalemate.
