Mutual funds to be accessible
KATHMANDU, MAR 29:
The capital market regulator is planning to use mutual funds to involve prospective investors from all over Nepal.
The draft of the Mutual Fund Guidelines 2068 has asked mutual fund companies to establish a distribution network across Nepal. It says that open ended mutual fund schemes with an offer value greater than Rs 50 million has to have a minimum of one application collection counter at each development region. As for close ended schemes, mutual funds can sell it through branches of banks and financial institutions or merchant bankers designated as distributors.
“The more extensive the distribution network, the better it is for the expansion of the capital market so we are trying to make mutual funds accessible from across the country,” said director of Securities Board of Nepal (Sebon) Niraj Giri. There are a number of brokerage houses operating outside the valley but trading is nominal making their branches almost defunct in bringing in transactions from outside the capital.
“Prospective investors from outside the valley do not have access to the trading system despite the presence of brokers. Mutual funds can be the perfect instrument for investors outside the valley,” he added.
During Sebon’s recent awareness tour for investors in Western Nepal, potential investors had complained about the absence of access to Nepse’s trading system. Entry of mutual funds in the Nepali capital market is expected to bring a much needed equilibrium in the demand and supply factors.
“Moreover, this will be the perfect instrument for investors outside the valley who do not have specialised knowledge about financial markets,” he pointed out.
The mutual funds guidelines are supposed to provide functional clarity to mutual funds who will start business in the near future. Mutual Fund Regulation 2067 has only specified requirements for the starting of mutual funds paving the way for the establishment of companies interested to sponsor and operate mutual funds.
The draft guideline has also explained on how to calculate Net Asset Values (NAV) of mutual funds to ensure uniformity in the calculation among different schemes. NAV is calculated by dividing the sum of market price of the securities and net outstanding return by the total number of mutual fund units.
Sebon has already provided a licence to Siddhartha Bank and Nabil Bank. They will work as the sponsor while its merchant banking subsidiaries will act as the asset management company as per the regulations.
Civil Capital qualifies as first DP
Civil Capital has become the first licensed Depository Participant (DP) of the upcoming CDS and Clearing (CDSC). Securities Board of Nepal granted Civil Capital the license to operate as DP on Tuesday. “We will apply for the membership at CDSC tomorrow,” informed CEO of Civil Capital Bhisma Raj Chalise. After receiving the membership from CDSC, individual shareholders will have to come to DP to dematerialise their shares. “CDSC might start operations from next month so we are fully prepared but it will take a few more months to set up branches outside valley,” Chalise added.
Source: THT
