Fully online share trading still needs some time to be rolled out; Cloud of confusion looming around; Technical know-how every investor must develop before jumping into online trading

Nepal Stock Exchange, the only security exchange in the country, is reportedly working in the final stage of software retesting in order to roll out the fully automated stock trading as soon as possible. Earlier, it was reported that the NEPSE would begin online trading system from the beginning of the new Fiscal Year. As per officials privy with the matter, the latest developments have presented some positive outlooks as NEPSE is said to be migrating its data from its old software to the new one developed by the software vender YCO while testing of the new platform is also moving ahead in full swing.

Mr. Murari Parajuli, spokesperson at NEPSE informed that they would be able to roll out the fully automated trading system once the final testing of the new software platform receives final nod provided that no major technical faults are encountered. As per Mr. Parajuli, NEPSE is opting for the “User Acceptance Test”, a third party test of the application that was submitted by YCO which may take some time now.

However, he was quick to clarify that NEPSE will not discontinue the present system of stock trading where the stock brokers put orders on behalf of their clients as the online operation will be a beta version one and the customers can’t be expected to learn all about online trading in its length and breadth in a short time.

How to conduct online share trading?

With the stock market gearing up to introduce full-fledged online trading in a matter of a month, it is very necessary that the investors should also roll up their sleeves for the same in order to get accustomed with all the dos and don’ts during the process of online trading. It is quite obvious that the investors might suffer from some confusions in early days of implementation of the new system which this article is aiming to reduce to some extent.

First, go to your stock broker and fill up one more application form following which the broker office will provide you your client ID and Password. While registering with the broker office, you will also need to provide your bank account number, Demat number and other personal details. After receiving your client ID and Password, you can log into the newly developed application and place orders to buy and sell shares at real time without depending on the share brokers (neither you need to call them nor be physically present). It is also reported that the software that is under development is mobile friendly too which gives you added option to place your share orders from any place where there is internet access to your smartphones.

It is also reported that there will be a provision of two options “stock dealer and individual investor” in the soon-to-be launched system which will help to incorporate long-planned mechanism to include Citizens Investment Trust as Market dealer. Earlier, it was decided that the CIT will be designated as market dealer however lack of technical arrangement was preventing in its real-time implementation.

Next, you will have to choose between 4 investment categories in which you are interested in making investment. These four categories reportedly are Share, Bond, Mutual Fund and Debenture. After choosing one of these broad categories, you will be directed to the respective pages where you can choose the individual company on which you are willing to make your investment.

Then, it is about providing the share order which can be given in 3 forms i.e. limit price, market price and Stop loss. In limit price system, you will have to quote your price in between the window of pre-determined maximum and minimum price range. In case of Market Price, you can quote the price that is currently equivalent to what the ongoing market price of the stock is following which the price will be matched to the minimum price at the given time. In case of Stop loss, you can place your order quoting the price to which you have an ability to bare risk.

After confirming the amount of transaction, you are then required to choose the quantity of the share you would like to sell or purchase. Unlike previous practice, the new software also has a provision to allow investors to disclose only certain portion of their ordered share while keeping the remaining shares hidden. With this, the software also allows you to review and make change in the prices of your displayed and hidden volume of shares intermediately. For an example, if you have to purchase 50 unit shares, you will have option to disclose only the initial 10 units at certain price while keeping the remaining 40 units hidden so that you can have added advantage of fluctuation of price.

Provision of Auction Market and Trade Guarantee Fund

These are relatively new concepts to our market.  The soon-to-be-released system has a special provision to address the requirement of a seller who happens to place sell order of more shares that s/he actually possesses. In such a case, the stock broker can enter the auction market, hold up the mismatched shares and later settle the transaction as in the auction market. On the other hand, when someone puts an orders for some shares but doesn’t make payment for it, then a loan will be issued from Trade Guarantee Fund which would later be settled between the stock broker and the investor.

Apart from selling and purchasing shares, the investors can also view the market depth, information sent from NEPSE, details of transaction history and share portfolio.