Automated trading could propel Nepse's daily turnover to Rs 1b: Sebon

KATHMANDU, June 8 :

Average daily turnover at Nepal Stock Exchange (Nepse) can climb to Rs 1 billion if the much-awaited Central Depository System (CDS) and the automated trading of securities come into full-fledged operation, according to Securities Board of Nepal (Sebon).

Average daily turnover at the bourse currently hovers around Rs 320 million.

“Once the CDS and Clearing (CDSC) Ltd starts operation and the online trading of stocks begins, trading of shares will go beyond the capital city. Also non-resident Nepalis can invest on securities. This will increase daily turnover to Rs 1 billion,” Sebon Chairman Babu Ram Shrestha said at a press meet organized here on Sunday to brief media persons about the activities carried out by the stock market regulator in 2013/14 and its upcoming plans.

Saying that Sebon has done its bit to start full-fledged operation of CDSC, Shrestha said they were ready to facilitate CDSC and Nepse if need be.

“Many NRNs as well as investors outside valley are interested to put their money into the secondary market. However, the manual process of clearing and settlement of the traded shares have become a stumbling block for them to make investment. The full operation of the CDSC and online trading in Nepse will address that problem,” he added.

Though CDS was established in 2010, and inaugurated many times, to provide centralized depository, clearing and settlement services, it is yet to start full-fledged operation as the issuing companies are yet to de-materialize their shares.

Nepse is in the process of reviewing expressions of interest (EoI) to hire a consultant to install a complete online trading platform.

Chairman Shrestha also lamented that the Nepse could not move ahead by maintaining corporate culture. “There is a need to instill corporate culture in Nepse for its smooth functioning,” Shrestha said, hinting that the government should lower its stake in Nepse.

When questioned about Sebon´s soft stance toward Nepse, brokers and other listed companies despite their involvement in flouting market rules, Shrestha said the regulatory body was taking action in a ´constructive approach´.

According to the report of Sebon, it has ´reprimanded´ 22 brokerage firms to ´rectify the discrepancies´ it has found during the onsite monitoring of 50 brokerage firms and four merchant bankers between July to August 2013.

Sebon Spokesperson Niraj Giri said the reprimanded firms were found not keeping their accounts and ledgers up to date, not filling the selling/buying order form properly, and not complying with the Anti-Money Laundering and Combating Terrorist Financing Directive 2069, among others.

Giri also told media persons that draft bill on Commodities and Derivatives Market has been presented to the Sebon board for approval. He also said that Sebon was preparing Securities Market Development Strategy.

The capital market regulators have also admitted that it has not been able to lure the real sector companies in the securities market.

The secondary market is largely dominated by banks and financial institutions. Out of 239 listed companies, 173 are banking and financial institutions.

Source: Republica