Bureaucratic dilemma hurts CDS bylaw
KATHMANDU, Sep 26:
Central Depository System and Clearing (CDSC)’s frivolity in the matter of framing the regulation will further delay the operation of the country’s first central depository system (CDS).
“The bylaws prepared — by CDSC — and submitted to the regulator is half-baked that can not be approved at all,” according to an official of Securities Board of Nepal (Sebon).
Three weeks ago — after it was granted license by the regulator on August 25 — CDSC had submitted the bylaws for the operation. The bylaws prepared by CDSC do not even follow a proper structure meant for regulations, the officials said, adding that the statements are ambiguous and contradictory in places.
The capital market regulator will be holding discussions with CDSC officials to draft the final version of the bylaws. Sebon is stalling the approval of the regulations until the applicants prepare a proper regulation. “The ambiguous statements in the company’s regulation is not removed now as there will be more confusion in the future, once it starts the operation,” according to the regulatory authority that said it can not allow such amateur regulation to come into effect.
The officials of CDSC were not available to comment on the matter. Sebon had awarded CDSC licence to operate the first CDS on August 25 and had obtained Letter of Intent (LoI) in April. The company was inaugurated in March and was expected to start the operation by the beginning of the current fiscal year -mid July 2011 but owning to ‘various techincal’ problems, it could not be done.
CDSC is eagerly awaited by the capital market stakeholders as one of an important component to boost the current creeping market scenario. CDS will replace the current practice of physically holding and moving the scrip of shares by a safe and dependable computerised book entry system.
The dematerialisation of scrip means multiple transactions can be conducted on a single day. The system can transfer shares within minutes so that shares can be changed through multiple hands in a single day which will increase the transaction volume.
At present, it takes about two months for the share ownership transfer after the order placement so investors are unable to sell the shares immediately after the purchase. The implementation of CDS is supposed to wipe out inconsistency and manipulation in stock trading making the secondary market more transparent.
Moreover, the system will facilitate the investors outside the valley to easily transact the share which is quite difficult at present despite the presence of stockbrokers in major Nepali cities. CDS is considered to be a necessary infrastructures that will simplify the entry of Non Resident Nepali (NRN)’s entry in the secondary market.
Source: THT
Central Depository System and Clearing (CDSC)’s frivolity in the matter of framing the regulation will further delay the operation of the country’s first central depository system (CDS).
“The bylaws prepared — by CDSC — and submitted to the regulator is half-baked that can not be approved at all,” according to an official of Securities Board of Nepal (Sebon).
Three weeks ago — after it was granted license by the regulator on August 25 — CDSC had submitted the bylaws for the operation. The bylaws prepared by CDSC do not even follow a proper structure meant for regulations, the officials said, adding that the statements are ambiguous and contradictory in places.
The capital market regulator will be holding discussions with CDSC officials to draft the final version of the bylaws. Sebon is stalling the approval of the regulations until the applicants prepare a proper regulation. “The ambiguous statements in the company’s regulation is not removed now as there will be more confusion in the future, once it starts the operation,” according to the regulatory authority that said it can not allow such amateur regulation to come into effect.
The officials of CDSC were not available to comment on the matter. Sebon had awarded CDSC licence to operate the first CDS on August 25 and had obtained Letter of Intent (LoI) in April. The company was inaugurated in March and was expected to start the operation by the beginning of the current fiscal year -mid July 2011 but owning to ‘various techincal’ problems, it could not be done.
CDSC is eagerly awaited by the capital market stakeholders as one of an important component to boost the current creeping market scenario. CDS will replace the current practice of physically holding and moving the scrip of shares by a safe and dependable computerised book entry system.
The dematerialisation of scrip means multiple transactions can be conducted on a single day. The system can transfer shares within minutes so that shares can be changed through multiple hands in a single day which will increase the transaction volume.
At present, it takes about two months for the share ownership transfer after the order placement so investors are unable to sell the shares immediately after the purchase. The implementation of CDS is supposed to wipe out inconsistency and manipulation in stock trading making the secondary market more transparent.
Moreover, the system will facilitate the investors outside the valley to easily transact the share which is quite difficult at present despite the presence of stockbrokers in major Nepali cities. CDS is considered to be a necessary infrastructures that will simplify the entry of Non Resident Nepali (NRN)’s entry in the secondary market.
Source: THT
