Page 66 - SHB 2020 Issue 1

JSE Dealing Costs Profile’s Stock Exchange Handbook: 2020 – Issue 1

JSE Dealing Costs

JSE Dealing Costs
As the JSE grows so the cost of buying and selling shares continues to come down as the fixed costs of brokers
and the exchange are spread out over more trans ac tions.
Brokerage
Brokerage charged by stock bro kers varies from 0.32% to 1.70% of the value of the transaction. There is
also a clear distinction made between the fees of discount brokers and full service stock bro kers. Discount
brokers are usually online brokers and offer clients low brokerage fees and give rec om men da tions on what
shares to buy or sell via their website. Full service stock bro kers have much higher brokerage and ad min is tra -
tion fees. They provide advice on what shares to buy or sell via the telephone and usually provide a dedicated
portfolio advisor to their clients.
Some brokers charge brokerage fees as a flat percentage of the size of the trade. Others apply a sliding scale that
decreases the percentage charged as the value of the deal increases. Most brokerage charges are subject to a
minimum fee (eg. one discount broker charges R99 excl Vat whilst another full service broker charges a minimum
of R180). Note that brokerage is usually quoted before Vat as there are other transaction costs associated with a
trade that are subject to Vat (see below) and a total Vat amount is calculated on all these charges together.
For equity trans ac tions above R18 000 all inclusive round trip costs are typically below 2% via a discount
broker which is relatively cheap compared to unit trusts, property and many other investment al ter na tives. For
trading in warrants, where minimum brokerage often applies, the cost effective floor level is obviously lower.
Comparison of trade costs: R18 000 transaction:
Equity Trade Warrant Trade TFIA Equity Trade
Buy Sell Buy Sell Buy Sell
Cost of Shares R18 000.00 R18 000.00 R18 000.00 R18 000.00 R18 000.00 R18 000.00
Brokerage Fee R105.00 R105.00 R50.00 R50.00 R45.00 R45.00
Strate R9.17 R9.17 R9.17 R9.17 R3.97 R3.97
STT* R45.00 * * * * *
IPL R0.04 R0.04 R0.04 R0.04 R0.04 R0.04
Vat R17.13 R17.13 R8.88 R8.88 R7.35 R7.35
Total Fees R176.34 R131.34 R68.09 R68.09 R56.36 R56.36
Total Transaction R18 176.34 R18 131.34 R18 068.09 R18 068.09 R18 056.36 R18 056.36
Dealing cost percentage 0.970% 0.724% 0.377% 0.377% 0.312% 0.312%
Based on Standard Online Share Trading fees. *Purchase transactions of equities attract Securities
Transfer Tax (STT) of 0.25% of the value of the trade in addition to the amounts shown above.
Administration fees
Most brokerage firms charge a monthly ad min is tra tion fee designed to cover account ad min is tra tion, im -
ple men ta tion of corporate actions (share splits, payments of dividends, etc.) and so on. For discount brokers
this fee may also include access to an online trading facility, live share prices, fundamental data (such as in this
book) and research. Full service brokers may charge an ad min is tra tion fee as a percentage of the value
invested. For discount brokers monthly fees vary from as little as R99.00 (including Vat) to R210 depending
on the services provided.
Regulatory and other costs
In addition to brokerage, the JSE levies the STRATE Settlement Costs, calculated as 0.005787% of the
transaction value (minimum of R9.17, maximum R80.84), and an Investor Protection Levy (0.0002% of the
transaction value), designed to finance insider-trading in ves ti ga tions. Vat of 15% is payable on all these
charges as well on the brokerage fee.
Tax Free Investment Accounts
Since the in tro duc tion of Tax Free Investment Accounts in the Finance Minister’s 2015 Budget Speech,
many brokerage firms have introduced them into their offerings. The benefit of these accounts is that all
proceeds from investments are tax-free. To make these even more appealing the JSE and STRATE have
reduced their costs, which in turn have allowed brokerages to reduce the fees they charge their clients.
Standard OST operates TFIA accounts at a specially reduced brokerage rate of 0.25% + Statutory Costs, and
allows for trade in all tax-free approved Exchange Traded Funds. The standard TFIA brokerage fee is 0.25%,
no minimums apply.
Online Share Trading operated by SBG Securities (Pty) Ltd.

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