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Stockbroking firms under threat

Dumisani Muleya

STOCKBROKING firms are complaining about “exorbitant” stamp duty and bank charges levied on the deals they conduct on the stock market.

lvetica, sans-serif”>The firms, which buy and sell shares on behalf of clients, say the charges have remained high while business was plunging due to the equities market’s bearish performance.

A veteran stockbroker yesterday warned that if the situation remains unchecked a number of companies could close down.

“The situation is really bad because government is deducting stamp duty which is effectively 4% while banks are effectively charging us 1%,” the stockbroker said.

“The problem is that stamp duty has to be paid the following day after the transaction and this forces us to borrow money for a couple of days to pay that. In the process we have to pay huge sums in interest accrued on the principal sum.”

Another stockbroker said government was “killing the goose that lays the golden egg” through “extortionate taxes”.

“The stamp duty is really disproportionate compared with the amount of business we do these days,” the broker said. “Charges have to take into account the turnover and amount of business. Right now we have business going down while charges remain constant and the result is dramatically diminishing returns for us.”

A source said one stockbroker on Wednesday bought 800 000 Meikles shares for a client at $2 000 each in a $1,6 billion deal. The buyer paid $1,6 billion and the seller $1,5 billion.

The stamp duty paid in total was $64 million, while the brokerage fee was $16 million. The broker had to borrow the $64 million which had to be paid to government yesterday and the interest over six days would be $3,8 million. The total charges, which include stamp duty, bank charges, and interest repayments, would wipe out the brokerage fees, the broker said.

Zimbabwe Stock Exchange chief executive Emmanuel Munyuki said broking firms were being hurt by the charges levied on them.

“It’s true their operations are being affected but we are working with the Ministry of Finance to resolve the issue,” Munyuki said. “It has taken too long but we hope it will be addressed soon.”

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