Merchant Banker Association suggests SEBON to bring directive(s) after thorough discussion with stakeholders

Merchant Banker Association of Nepal has decided to suggest Securities Board of Nepal (SEBON) to bring in more practical and easily implementable provisions using existing infrastructure.

The meeting of Merchant Banker Association of Nepal held today decided to request SEBON work with stakeholders before bringing out new directives. A copy of the suggestions from the association has been emailed to SEBON for consideration.

In the directive issued yesterday, the association has sent proposal for changes in three areas.

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ShareSansar discussed proposed changes by the association with Mr. Prabin Raman Parajuli, chairman of Merchant Banker Association of Nepal.

Mr. Parajuli said, "We as an association welcome the efforts to automation and modernization of the capital market. However, it should be carried out by through discussion with the concerned stakeholders and looking at the limitation of existing infrastructure. Unilateral efforts might not always yield the intended results while it may also bring unintended complications".

Following is the list of suggestions sent by Merchant Banker Association of Nepal:

1. Reporting Requirement for public Issue

As of now we have been reporting collection data of the public issue, Initial Puvlic Offering (IPO) and Further Public Offering (FPO), to SEBON in next business day and final data within three business days of the issue closure.

It is still feasible for us to report the collection data same day for every offering day except the day on which issue closes. On the last day we will be collecting applications forms well beyond the normal business hours due to overwhelming response on that very day. So it is next to impossible to update accurate data for the last day on the same day. So, we have urged SEBON to amend this directive.

2. Cheque of Immediate Family

We request SEBON to make it mandatory to apply with single cheque for every application where the cheque owner must be the applicant him/herself. The existing waiver for immediate family member would be tedious and time consuming task for us to verify. Furthermore, there is no way for us to verify whether the all the applicants are the immediate family member or not. For example husband and wife may have different surname which will take extra time for us to verify. It will force investors to stand in long queues to submit application form.

3. Direct Deposit

It is not mandatory for Bank and Financial Institutions (BFIs) to accept direct deposit. For example, in case of HIDCL refund also many BFIs rejected the issue manager's request for direct deposit of the refund cheques. Furthermore, BFIs which agreed for direct deposit were unable to deposit the refund although the investors had provided correct A/C number and name due to the limitation on manpower and their existing system. So, firstly SEBON should work with the Nepal Rastra Bank to make it mandatory for BFIs to accept the direct deposit request. Secondly, this concept of direct deposit must be brought in after introduction of bulk processing module which is soon to be implemented.

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