Strate discount helps ensure cheaper TFSAs

Story Highlights

• TFSA discount
• Strate, tax-free savings account
• investors

Related Articles

• First to market with tax-free savings accounts
• EasyEquities wins best stockbroker tax-free account
• TFSAs for children – what you need to know

Staff Reporter 24 April 2015

Hannes van Eeden

Strate, SA’s central securities depository, is doing its bit to keep down costs on tax-free savings accounts (TFSAs), cutting its contract note fee by 67% to R3.85.

This will ultimately benefit investors: stockbrokers collect the contract note fee as  part of the commission they charge clients whenever they buy or sell instruments. Brokers then pay it to the JSE, which pays it to Strate. Strate’s lower fee will enable stockbrokers to pass the discount on to clients, however, Strate CFO Hannes van Eeden emphasises that it is up to the brokers to do so. The discount applies to the instruments that are compliant with TFSAs, which currently includes around 40 or so listed exchange traded funds.

He says Strate’s discount is to support National Treasury’s initiative to address SA’s low level of savings. “The introduction of the tax-free savings products aims to address these low levels and encourages individuals to save more, as well as participate in investing in the financial markets.”

Strate is the depository for equity, bond and money market instruments. It transfers ownership from the buyer to seller and keeps the records of ownership for financial instruments. It also dematerialises all trades – converting them from paper to electronic format. By lowering its charges for instruments specifically used in JSE-based TFSAs, Strate is helping make TFSAs even more attractive.