Money

Sebon yet to issue licences to securities dealers

  • It was supposed to do so once the online trading system was launched on Nov 6
- RAJESH KHANAL, Kathmandu

May 17, 2019-

The Securities Board of Nepal’s plan to allow stockbrokers to work as securities dealers is in doubt as the regulator continues to procrastinate on revising the related laws.

The board was supposed to licence the stockbrokers to function as market dealers after Nepal Stock Exchange launched the full-fledged online trading system on November 6.

After the online trading platform came online, the board had also asked the frontline regulator to initiate work to open licence of market dealers.

However, the board itself has failed to enforce the related regulation.

The institutions licenced as market dealers are allowed to buy and sell securities for themselves as opposed to stockbrokers who act on behalf of their customers. Unlike other investors who need to use a broker’s platform to trade shares, securities dealers can use the stock exchange interface directly. Securities dealers are also allowed to underwrite stocks of listed companies.  Niraj Giri, spokesperson of the board, said they are now amending the Securities Businessperson Regulation. According to him, the existing regulation limits the working area of stockbrokers to only trading on behalf of their clients.

“We are now at the final stage of drafting the amended regulation and will soon forward it to the Finance Ministry for approval,” said Giri.

The provision of securities dealers is expected to improve the transaction at the secondary market, thereby increasing the cash flow at the market.  

After the slump in demand for stocks, the secondary market index that crossed 1,850 points two years ago is now hovering at around 1,300 points. Both investors and stockbrokers have been demanding the board to implement the provision for a long time. In December, the panel formed under the Ministry of Finance to address the problems in capital market, had also suggested the board to issue licence of securities dealers.

The board had already allowed the Citizen Investment Trust to operate as a market dealer.

The trust said it was unable to operate the function using the old software of stock trading implemented by the Nepal Stock Exchange.

Following the inception of the new online trading interface, the trust was supposed to start its work from mid-April and also planned to create a basket fund of more than Rs50 billion for the purpose.

But it had to stall its plan after the government started process of revising the old Citizen Investment Trust Act. Uddab Raj Silwal, information officer of the trust, said they were waiting for the endorsement of the new Citizen Investment Trust Act which is at the parliament.

Published: 17-05-2019 08:36

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