Page 57 - SHB 2021 Issue 4

Profile’s Stock Exchange Handbook: 2021 – Issue 4 JSE Dealing Costs

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 transactions.
Brokerage
Brokeragechargedby stockbrokersvariesfrom0.32%to1.70%ofthevalueofthetransaction.Thereisalsoa
clear distinction made between the fees of discount brokers and full service stockbrokers. Discount brokers are
usually online brokers and offer clients low brokerage fees and give recommendations on what shares to buy or
sell via their website. Full service stockbrokers have much higher brokerage and administration fees. They
provide adviceon whatsharestobuyorsellvia thetelephoneand usuallyprovide adedicatedportfolioadvisorto
their clients.
Some brokers charge brokerage fees as a flat percentage of the size of the trade. Others apply a sliding scale that
decreasesthepercentagechargedasthevalueofthedealincreases.Mostbrokeragechargesaresubjecttoaminimum
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 transactions 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 alternatives. 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 R110.00 R110.00 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 brokeragefirms chargea monthly administrationfee designed to cover accountadministration,imple-
mentationofcorporateactions(sharesplits,paymentsofdividends,etc.)andsoon.Fordiscountbrokersthisfee
mayalsoincludeaccesstoanonlinetradingfacility,liveshareprices,fundamentaldata(suchasinthisbook)and
research. Full service brokers may charge an administration fee as a percentage of the value invested. For
discount brokers monthly fees vary from as little as R110.00 (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 JSE
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 investigations. Vat of 15% is payable on all these charges DEALING
as well on the brokerage fee.
Tax Free Investment Accounts
Since the introduction of Tax Free Investment Accounts in the Finance Minister’s 2015 Budget Speech, COSTS
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 theseevenmoreappealingthe JSEand 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 0.15% + an annual safe custody
fee, charged on a monthly basis, 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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