The Nepal Capital Market Investors Association has asked the Securities Board of Nepal (Sebon) to formulate policies to help small and long-term investors in the secondary market.

Included in the 13-point list of demands, which was submitted to Sebon on Thursday, are waiving capital gains tax for long-term investors, enforcing fully online trading, establishing at least 10 brokerage firms in each of the seven provinces and issuing broker licences to commercial banks.

Speaking at an interaction, Nawaraj Subedi, president of the Nepal Capital Market Investors Association, said banks were reluctant to issue loans to small investors wishing to buy shares. 

“Potential investors who want to borrow up to Rs200,000 to buy shares are often turned away by financial institutions,” said Subedi. “The regulator needs to coordinate with banks to grant loans to small investors too.” 

Similarly, investors have asked Sebon to reduce brokers’ commission to a maximum of 0.2 percent from the existing 0.4-0.6 percent. Till last year, the commission charged by brokers ranged from 0.7 to 1 percent. Currently, the commission charged by brokers for a transaction valued up to Rs50,000 stands at 0.6 percent.

Investors have been urging Sebon to reduce the commission rate further. “Small investors, in particular, are suffering due to the high fees,” Subedi said. 

Increasing the paid-up capital to Rs100 million for brokerage firms based in the Kathmandu Valley and allowing stockbrokers to open branch offices elsewhere in the country are other demands put forward by investors. 

“If commercial banks are granted broker licences, investors from out of the Valley will benefit,” Subedi added.

Likewise, share investors have asked Sebon to waive capital gains tax for investors who make investments in shares for more than a year. Currently, all investors, regardless of the time period, are charged 5 percent capital gains tax on stock transactions. 

“The provision will benefit long-term investors and help to bring stability in the share market,” said Uttam Aryal, president of the Share Investors’ Association. 

Meanwhile, Sebon said it had been working to allow commercial banks to operate as stockbrokers. “The Finance Ministry has formed a committee to make a study,” said Paristha Nath Poudyal, executive director of Sebon. 

Sebon Chairman Rewat Bahadur Karki said they were finalising the modality to allow non-resident Nepalis (NRN) to increase investment in the capital market. 

“We have done a study to set the investment limit for NRNs and the time frame within which they will be allowed to repatriate profits,” Karki said.