Amidst Talks of Eliminating Brokers from NEPSE's System, Stock Brokers' Association Delivers High Hopes and Promises

There have been talks of eliminating stockbroker companies altogether from Nepal's capital market. All broker offices use the trading platform provided by the exchange itself. As such, it does not take a very smart person to realize that the brokers take a cut of every trade in commission by apparently doing nothing.

Almost as if to prove their usefulness, the Stock Brokers' Association of Nepal has unveiled a Press Release that delivers high hopes and promises. The association believes it possesses the ability to introduce High-Frequency Trading and Algorithmic Trading into Nepal's capital market. On top of it, if the regulatory body and the exchange cooperates, the association believes this system will come into operation as early as Shrawan of the upcoming year itself.

Is this a strategic move by stockbroker companies to save face (and existence)? Or is the association actually determined to change the fate of Nepal's securities market?

The following is the official Press Release by the Stock Brokers' Association of Nepal. The document is translated into English while keeping the original message intact:

The secondary market, which could not come into operation for some time due to Covid 19, finally came into operation from 15th of Asar, 2077 BS. The number of beneficiary accounts, Meroshare account, trading account, and online users increased many times after this happened.

Due to the obligation to maintain social distance, the entire payment of securities and transaction amount related to the secondary market was done through electronic means. It was not a trivial matter to manage this growth and change in a short period of eight months. Thanks to the speedy capacity building of our securities brokers and the diligent work of our staff, about seven lakh active investors and over six lakh online users are able to trade with ease today. The role of SEBON, NEPSE, CDSC, and Depository Participants is also commendable.

Due to the closure, there has been some difficulty in expanding the capacity. In the past, the complaints of the investors have increased a bit. We have been working day and night to resolve the grievances, and such complaints are decreasing nowadays. Nonetheless, there are still some complaints about securities and payments.

We have to make payments through the use of systems that are not owned and controlled by us, and such systems are frequently problematic. There are restrictions on the use of the system and we have to rely on other agencies for a long time to resolve common problems. This affects timely payment clearance and settlement. The system is being developed and tested at the joint initiative of broker companies and CDS & Clearing Ltd. to solve the problem of securities payment. We believe that it will come into operation in the near future and the grievances of the investors related to the payment of securities can be fully resolved. Similarly, we are in constant discussion with all parties concerned to resolve the issues related to payment.

Despite all that, if the investor is not able to receive the amount in time through the payment system because of the investor's details not being up to date or due to any other reason related to the system, we request all the investors to go to the concerned broker's office and collect the payment through check.

We, the business community, are always ready to comply with all the provisions of the regulatory body, to use the methods and systems used by brokers in the international arena, and to increase the foreclosure as required. We have a strong desire to expand the secondary market in every region of the country through official representatives and sub-brokers and to further accelerate the barge by providing additional services such as margin trading, investment consulting, investment management, and intraday trading. And we are capable of that.

We are always eager to develop an international level business structure and provide the same level of broker service to the general investors. For this, we expect the necessary guidance and support from the regulatory body and market operators. In order to provide efficient service, manage the risks inherent in the business and alleviate the suffering of the investors in the business, we have jointly initiated an agreement to bring the trading system used in more than ten countries. Investors are expected to be able to use the system from Shrawan 1, 2078, if proper support is received from the concerned parties. The system allows the trading of various instruments including shares, debentures, bonds, derivatives, currencies on one or more stock or derivatives exchanges simultaneously.

The data will be kept in this system so that fundamental and technical analysis of the economy, market, and listed companies can be done. Investors will be able to view the entire account of their business and their portfolio and profit and loss status through this system. This system will have Stop Loss, Take Profit, Algorithmic, and Highfrequency trading among other functionalities.

We will always focus on quality service delivery. We look forward to the continued support of all stakeholders and investors. Thank you.