Stockbrokers are asking the Securities Board of Nepal to allow them to operate as proprietary traders, portfolio consultants and portfolio manager too. The board is preparing to allow banks to provide brokerage services and the Citizen Investment Trust to operate as a stock dealer.

The stockbrokers submitted a 28-point demand to the board on Tuesday to be allowed to diversify their services. Currently, they can only post purchase/sale orders on behalf of their clients.  

Proprietary traders offer capital to individuals or institutions to trade stocks, bonds, currencies, commodities and their derivatives or other financial instruments. Portfolio consultants advise investors on developing investment strategies. Similarly, portfolio managers take prudent decisions on channelising the funds collected from investors.

As per stockbrokers, the new provisions can help increase liquidity in the market besides creating adequate demand for shares. Bharat Ranabhat, president of the  Stockbrokers’ Association of Nepal, said the measures could help increase cash flow in the market and provide easy access to investors to purchase shares.  

The stock market is currently going through a bearish period with the Nepal Stock Exchange (NEPSE) index hovering around 1,100 points, a situation attributed to a glut of stocks in the market.

As of mid-January, the total number of shares registered at NEPSE had reached 3.94 billion units, according to Nepal Rastra Bank’s latest Current Macroeconomic Report. Listed shares went up by 9.5 percent in the first half of the current fiscal year.

Stockbrokers urged the board to devise reasonable standards of technology, capital and manpower to allow them to carry out these functions. They have also sought an effective role of the board to implement the policy and monitor the market.

Launching branchless brokering services outside the Kathmandu Valley by improving the automated online trading platform, amending working guidelines to permit quick implementation of the margin trading system and blacklisting firms involved in malpractices in the secondary market are among the demands put forth by stockbrokers.

They have also asked the board to implement a free pricing system when listed companies issue primary shares, create a provision to allow them to trade financial instruments such as debentures, derivatives and exchange-traded funds, and make insurance mandatory in the stock exchange business.