CDSCL starts operation, albeit manually
KATHMANDU, NOV 01 -
The Central Depository System and Clearing Limited ( CDSCL ) has started its service operation on trading, clearing and settlement of securities. The state-owned company, however, is yet to provide a full-fledged electronic service as promised.
The much-touted company has taken over the entire task of settlement and clearing related to share trading which used to be carried out at the Nepal Stock Exchange (Nepse).
“On Tuesday, we settled the transactions conducted on Oct 17 at Nepse,” said Subodh Sharma Sigdel, CEO of CDSCL . “However, settlement of all the transactions could not be done as stockbrokers did not submit the necessary paperwork citing a staff shortage because of the festival.” Likewise, settlement of the transactions done on Oct 18 was carried out on Wednesday.
The takeover of Nepse’s tasks by CDSCL will not make any difference in the way the capital market performs as settlement is done manually. However, clearing and settlement will be done faster compared to the time taken at Nepse. At CDSCL , clearing and settlement is done within three days following the trading day (T+3).
“Nepse has provided us login facility and brokerage firms visit our office to carry out the job of clearing and settlement,” said an official at CDSCL . “This will make our staff familiar with the job before CDSCL goes electronic.” Meanwhile, full fledged electronic operation of CDSCL is still in limbo as the Securities Board of Nepal (Sebon) is yet to approve the Clearing and Settlement Bylaws of CDSCL . The company had sent the bylaws to the board for approval in August and it was returned for amendments.
Sigdel said that the committee working on the Clearing and Settlement Bylaws had consulted a senior Sebon official and made the changes asked by the board. “We will submit the final draft to Sebon on Sunday,” said Sigdel. “Since we have addressed the issues raised by them, we hope they will not take much time to approve the bylaws.”
Sebon’s major concern was a provision in Section 2 of the bylaws for the creation of a separate autonomous department within CDSCL for clearing and settlement. As per the board’s view, the separate unit will invite a conflict of interest within the company in the near future. Sigdel said that they had removed the separate autonomous unit from the bylaws.
Likewise, the board had also asked CDSCL to provide operational details of the settlement and guarantee fund mentioned in the bylaws. Clause 58 of Section 7 mentions such a fund but does not say anything about its operational details. The board has now agreed to scrap the idea of starting a settlement and guarantee fund.
“Although it is considered to be a very important element of the capital market throughout the world, the market is still very small and the risk of default by brokers is still very low,” said Sigdel. “So we do not need such a fund presently.”
CDSCL plans to hire expert consultants from abroad to prepare the operational details of such a fund in the near future.
Nepse crosses 450-pt mark
After the surge in the index representing the commercial banks, the benchmark index at Nepal Stock Exchange (Nepse) on Wednesday crossed 450-point mark for the first time in more than two years. Nepse, which opened at 447.83 points on Wednesday morning, gained 3.6 points to close at 451.43 points. The index had last crossed the 450-point mark on August 16, 2010.
The group representing commercial banks saw a sharp rise in its index, with a growth of 8.54 points to settle at 390.97 points. The surge in banking index was largely due to the rise in share price of Nepal SBI Bank, Everest Bank, Bank of Kathmandu and Standard Chartered Bank Nepal among others.
Apart from the commercial banks, hydropower companies went up by 17.09 points to close at 962.63 points. Similarly, the group representing development banks, finance companies and insurance companies registered growth of 2.44, 0.67, and 8.52 points respectively. However, the index representing others shed 17.62 points. The index of hotels, manufacturing companies and trading firms remained intact.
Meanwhile, the trading volume at exchange was also high, registering a turnover worth Rs 58.34 million following the trading of 187,241 shares through 1,142 transactions.
Source: The Kathmandu Post
