The Securities Board of Nepal (Sebon) said Thursday it had started talks with the Finance Ministry to reduce taxes on share trading in a bid to boost the flagging stock market.

Alarmed by a sustained bearish trend in the secondary market, Sebon said it wanted to promote the stock exchange as a market for investors rather than a market for speculators. The regulator urged potential investors to examine the fundamentals before investing in stocks.

The Nepal Stock Exchange (Nepse) index has been sliding over the last two months.

The Nepse plunged 167 points in the past month, and market capitalisation shrank from Rs1,622 billion to Rs1,429 billion. Daily transactions have dropped to as low as Rs180 million from the average daily turnover of Rs1 billion.

Sebon Executive Director Niraj Giri said the regulator was working to introduce policies to reenergize the market. “We do not want to encourage speculative trading on the stock market,” said Giri. He urged investors not to go after rumours being circulated to push the vested interests of a few investors.

Introducing institutional investors as market dealers, revising provisions related to margin lending and adjusting commissions for stockbrokers are some of the moves the regulator has planned.

Giri said Sebon had started homework to introduce institutional investors such as the Citizens Investment Trust and stockbrokers as market dealers. “In a deregulated market, we are not after introducing new market makers, rather we have focused on developing new market dealers.”

As per Sebon, volatility in the secondary market is a common phenomenon. Giri added that the regulator had launched a number of regulations to control speculative investments and possible manipulations in the market over the last one year.

Timely introduction of a full-fledged online trading platform, revision of commission for stockbrokers, transparency in government policy related to the stock exchange, revision of provisions related to margin lending and licensing new brokerage firms are among the major demands of investors in the stock market. Giri said they were mulling to revise the commission rate for brokers.

There are 50 brokerage firms in the country. Brokers charge a commission of 0.4 to 0.6 percent on the total transaction amount, down from 0.7 to 1 percent previously. Brokers can charge 0.6 percent commission for trade amounts of up to Rs50,000; 0.5 percent for trade amounts between Rs50,000 and Rs500,000; and 0.4 percent for trade amounts exceeding Rs500,000.

Nepse General Manager Chandra Singh Saud said they were working to introduce an online trading platform from the next fiscal year. “We have completed construction of 15 of the 16 modules required for the online system,” said Saud, adding that Nepse was working on the last module that is concerned with stockbrokers. “New technology is expected to solve a large number of problems being observed in the market.”

Dev Gurung, chief whip of the CPN (Maoist Centre) parliamentary party, said the government supported promoting capital mobilisation through the stock exchange.

Nepse slides 10.63 points

The Nepse dropped 10.63 points to close at 1,220.44 points on Thursday. The market opened at 1,231.16 points before falling to 1,207.92 points in the first one and a half hours. The index had reached a high of 1,238.24 points.

The turnover stood at Rs441.64 million.