Increased transactions keep stakeholders busy

KATHMANDU:

Stock brokers, the stock exchange and clearing body are in an overdrive to manage timely settlement of transactions held due to increased trading volume.

Since the past week, the transaction volume at Nepal Stock Exchange has jumped manifold as the benchmark index is steadily rising. The index crossed 700 points on Wednesday, attracting more investment. Nepse has even increased the limit on transactions by brokers so that they can undertake transactions worth 50 times their security deposits with Nepse.

In the current week alone, Nepse has undergone trading worth more than Rs two billion. Moreover, the number of transactions has also doubled as the bull run in the market has attracted more investors. “Since we are handling many more transactions as market has become favourable, it is more difficult to process the post trading clearing and settlement,” pointed out president of Share Brokers Association of Nepal Narendra Raj Sijapati.

“That is why, the stock exchange has agreed to keep its server open 24 hours so that brokers can access it and prepare for the settlement of the transaction they have undertaken,” he informed. Earlier, Nepse kept its server open only during office hours.

Nepse that used to undertake clearing and settlement of the shares traded earlier has outsourced the task to its subsidiary, CDS and Clearing Ltd, since October 2012. When stock exchange used to undertake the settlement, investors rarely got their transactions settled within the regulatory four days.

Nepse bylaws have stated that share traders must get their transaction cleared and settled within three days of the trading — T+3 days. However, investors had to wait for at least 15 days to even receive the blank transfer certificate stating that the trading has been undertaken.

“Our staff are working till 10 in the evening at present so that we can fulfil the commitment of settling the transaction within T+3 days,” informed an official at CDSC.

Though CDSC has failed to start automated clearing and settlement of transactions since a long time, it has proven its efficiency in undertaking the manual settlement. Bullish share prices, increased limit on brokers, and easy availability of credit due to surplus liquidity in the financial system have fuelled transactions at the moment.

Source: THT