The title certainly is infuriating, but this is how things are in Nepal's capital market. With 31,23,347 Demat accounts in the country, most of them opened in the last few months, investors are ready to embrace a maturing capital market. However, it seems that the capital market itself is not.
While the incidents that have occurred for the past few days led the editor to pen this piece, this is not the first time the problem is seen. Anytime an IPO issue opens to the general public, the influx of traffic causes the Meroshare portal to slow down, or completely stop working. While writing this, the portal is having issues taking login credentials from the user, hence causing tremendous frustration among investors, especially among the new cohort of investors who have entered the capital market in the recent IPO buzz.
This primarily affects the IPO issues. Had it not been for the ongoing bull trend and the entry of newbie investors, this "technical" problem of Meroshare would surely affect the subscription of IPO issues. Apart from affecting the IPO issues, the problem also affects the timely settlement of shares. Although SEBON has recently made it compulsory to settle shares within the next day of transacting, there are numerous instances where investors weren't able to perform EDIS by logging into the online portal. Since a transaction involves two parties, this issue slows down the entire process from the buyer to the seller.
Sharesansar has covered multiple instances of investors being caught in closeout for incidents they did not cause themselves. Furthermore, we even had incidents of faulty selling and buying from the TMS portal a few months ago. Technical faults in Meroshare's system caused investors to sell the shares they never owned, which caused other investors to buy the shares that never existed.
On such matters relating to personal finance and monetary transactions, such errors are critical and should be analyzed with the highest of sincerity.
Sharesansar also gets frequent complaints about the official portal displaying inaccurate information itself. An observant investor certainly remembers the day when NIFRA lost 100% in a single day and had an LTP of Rs. 0. While this was just a technical glitch, numerous social media uploads by new investors showed that they certainly were misled by the glitch and were in a state of panic.
The list of problems goes on, including the TMS portal displaying erroneous buy and sell orders. Investors decide their entry and exit points based on the buy and sell orders. To display erroneous order volumes is a direct act of market manipulation, be it because of technical glitches or be it by the stock exchange itself. In an exchange that is supposed to be free, regulated only by independent supply and demand, this is an act of betrayal. This is no different than a robber taking money from a farmer to fund his plans to rob the farmer himself.
The editor is reminded of a personal phone conversation with the spokesperson of an official institution of the exchange, which is the provider of the Meroshare portal. The spokesperson stated that they were of the opinion to upgrade the resources of the only stock exchange of Nepal.
However, he also opined that if the update is too high, there may not be optimum utilization of resources at times when the traffic is not significant. With due respect, Mr. spokesperson, the all-time high optimism of investors, record-breaking number of IPO applicants and turnover, and the index trading at all-time highs are enough indicators that it is time to revamp the system on a grander scale.
The editor refrains from listing the solutions to all these problems in this short article. As a matter of fact, the exchange, the board, and all related bodies do not lack officials with ideas. They certainly know more than anyone reading this, given the frequent international visits they do for research purposes. However, it seems that what they really lack is a will to implement these ideas in some regard.
A significant percentage of investors now belong to the youth population. These are individuals who learn from the internet from the most elite teachers and grow up observing the biggest stock exchanges and the best hedge fund with revolutionary investment strategies. As such, it is time our stock exchange back home stops being an immature market with limited access to information and a crappy online portal.
This article is not to be taken as a personal rant but as a collective voice of hundreds of investors the editor has had the opportunity to listen to, both personally and professionally.