Nepse Online Trading System goes live

- Rajesh Khanal, Kathmandu

Nov 7, 2018-

The Nepal Stock Exchange (Nepse) on Tuesday officially launched full-fledged online stock trading that allows investors to place buy and sell orders over the internet. The Nepse Online Trading System (NOTS) is expected to ease management of the growing transaction volume and provide access to a large number of potential investors. 

To use the new system, investors need to obtain their user ID and password from their respective brokers after updating their Know Your Customer. Under the semi-automated system that was in place previously, investors were able to observe only the status of their trading, and they could not place an order to buy or sell shares.

Inaugurating the NOTS, Finance Minister Yubaraj Khatiwada said the commencement of the online system was one of the milestones in the development of stock trading infrastructure. “However, the development of the stock market will assume full shape only after additional components such as the diversification of markets, products, market makers and market instruments and modernisation of CDS and Clearing are completed,” Khatiwada said. 

The finance minister said the government was emphasising the enforcement of the NOTS as part of e-governance in the capital market. Criticising the functioning of mutual funds, Khatiwada said the government was looking to diversify the institutions for market makers to minimise possible manipulation in stock trading. The NOTS features 20 modules related to internal control system such as listings, matching engine and index management, brokers management, real time information flow, risk management system, traders work stations, super administration terminal, order route management, exchange massaging system, members portal, brokers back office management, supervision system, users management, market makers and management information system and reporting. 

Nepse launched the NOTS on the first day of the fiscal year on July 17 after taking delivery of the system from YCO, an Indian vendor company that developed the software. But the platform was not opened to the general public as Nepse first wanted a third party to conduct user acceptance testing (UAT) of the software to ensure that the online system could perform the required tasks after coming into full-fledged operation.

Nepse General Manager Chandra Singh Saud said they launched NOTS as one of the components of the modernisation of the stock trading system. According to him, Nepalis residing abroad will also be able to trade stocks using the NOTS. “If interconnectivity is established among the clearing banks, it will allow fund transfers and investment in the Nepali stock exchange by foreigners too.”

Nepse has licensed four banks to conduct clearance of share transactions. They are Global IME Bank, Prabhu Bank, Nepal Investment Bank and Siddhartha Bank. 

Bharat Ranabhat, president of the Stock Brokers Association of Nepal, said online stock trading would not take full shape until an online payment settlement system is established. “Although investors can buy and sell shares from their place, they still need to visit their broker’s office to complete financial settlement,” Ranabhat said. 

Ranabhat stressed the need to create additional market makers and a settlement guarantee fund. “If this is done, the possibility of cartels influencing share prices will be eliminated,” he added. 

Published: 07-11-2018 09:03

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