Demat share trading system from today
KATHMANDU, APR 15 -
CDS and Clearing Limited will start demat system of share transaction, wherein shares and securities are represented, traded, and maintained electronically, from Tuesday.
The system, being adopted for the first time in the country, will make the process for sales, purchases and transfers of shares significantly easier, mitigating most of the risks associated with paper certificates.
According to CDS, it will first carry out transactions of three stockbrokers that have acquired Clearing Member (CM) licenses. Of the 50 stockbrokers that have acquired CM licences, only six have maintained the bank guarantee required for carrying out demat trading.
The three brokering companies whose transactions will be carried out electronically in the first phase are Kalika Securities, Vision Securities and Trishakti Securities. “However, the other three have not submitted papers of their agreement with software developers,” a CDS official said. It has been almost a year since the CDS was launched. It had planned to start full-fledged online clearing by October, 2013. However, the reluctance of stockbrokers and companies to acquire CM and depository participant (DP) licences had been impeding the CDS plan.
Companies had been demanding a review of the deposit guarantee provisioned by the Securities Board of Nepal (Sebon) to take DP licences.
The regulator ahs relaxed the provision for CMs, allowing them to show Rs 1-million bank guarantee instead of making a cash deposit. But for DP licence, a company still needs to have a net worth of Rs 10 million.
Once the demat transactions begin, CDS will have to take the entire listed companies into paperless clearing system within the next six months, according to the CDS Bylaws 2012.
The CDS official said a number of companies, including brokers, had been pressing for demat trading. “They have said they will come to the demat system of share trading soon after the online clearing is launched.”
Under the demat transaction system, investors will have to place selling order only after dematerialising their share certificates, which is done through DPs. Both CMs and DPs are directly linked to the CDS through software, which settles stock transaction instantly.
Narendra Raj Sijapati, president of Nepal Stockbrokers’ Association, said the demat transaction system will reduce the clearance time to three days.
Of the 235 companies listed on the exchange, only 16 have so far reached an agreement with CDS for dematerialising their stocks. CDS has issued DP licences to 10 companies, and has registered 6,392 share certificates for dematerialisation.
Source: The Kathmandu Post
