My client is buying and selling shares on the South African sharemarket. I’m responsible for checking that trades settle and match on time.
However, with the way our system is setup it defaults our market instruction to CBO (Change of Beneficial Owner).
The brokers contact me and always tell us that it needs to be NCBO (No Change of Beneficial Owner). All brokers have said the same thing and there doesn’t seem to be any exception. This means I need to manually cancel the automated instruction and then manually release new instructions as NCBO everytime my client trades in South Africa.
I did a quick google search and it seems there are tax implications for CBO trades. It seems like the brokers are trying to avoid taxes by claiming it’s a NCBO trade.
I questioned it to the brokers and I didn’t really get a straight answer. One broker made the claim that “all electronic trades are always NCBO” which sounds ridiculous to me.
In my opinion, all on-market trades should be CBO and I can’t think of a scenario where it would be NCBO which makes me think the brokers are being dodgy. No other country has this issue.
Is it correct that trades in South Africa are NCBO?
Will me or my client get into trouble if it turns out we’ve been changing our instructions to NCBO incorrectly?
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