Share registry rates to double

Sebi fiat, post ONGC fiasco, forces registrars to upgrade infrastructure.

Companies that issue capital will have to incur higher costs. The share registrar industry, led by registrars like Karvy, MCS, Bigshare Services and Intime Spectrum, is all set to double service charges for the second time in the last six months.

The industry is now considering doubling the share registry rates from the current Rs 3-4 per application to about Rs 7-8 per application.

Registrars charge all issuers of capital this fee for processing each individual application form, for equity products. The industry says the current low fees are barely enough to make ends meet and consequently it is left with little resources to invest in infrastructure and people upgradation.

S Ramanujam, managing director, Intime Spectrum, the registrar to the recently concluded Datamatics and Dishman Pharma public issues, told Business Standard, "Rates have gone up in recent times and are set to go higher as it is difficult to cover costs and also to develop infrastructure."

Market participants say the reason for this hike in rates is that the Securities and Exchange Board of India chairman G N Bajpai has directed market participants, particularly share registrars, to enhance and develop their infrastructure on priority after registrar MCS created havoc in the Oil and Natural Gas Corporation (ONGC) share allotment process.

Sources in the registrars' camp said registration rates had been increased for the first time soon after the allotment problems surfaced in recent public sector issues like those of ONGC, Gail and Power Trading Corporation.

At that time, the rates were hiked from about Rs 2 per application to current Rs 4. This is set to go up to Rs 7-8 per application form.

Sebi has constituted a new committee, the Securities Market Infrastructure Leveraging Expert Task Force (Smile), which is to work with market participants to identify the deficiencies and work on solutions to upgrade the market. Surprisingly, registrars have found no representation on the task force.

Cashing in

• Registrar industry considering second hike in fees in the last six months
• Industry under pressure to modernise and upgrade facilities
• Low fees leave no surplus, hence the hike