Nepse gives brokers 3 days to settle share transactions

KATHMANDU, March 2: 

In yet another move to implement a rule long disregarded by equity market players, Nepal Stock Exchange (Nepse) issued a circular directing all stock brokers to complete share transaction settlement process within four days of the trading of stocks.

The new instruction means brokers buying shares and brokers selling shares will get only three days, excluding the day when shares were traded, to wrap up the process of handing over money and stock ownership certificates. 

In its circular Nepse has specifically mentioned that buyer broker must deposit the amount incurred in purchase of stocks at Nepse a day after the trading of shares. 

The next day, the seller broker must handover share certificates to Nepse for ownership transfer. And on the third day, Nepse should deposit the amount it received from buyer broker in seller broker´s account.

“Although the provision of settling share transactions after three days of trading is not new, we had to issue the circular after we found severe violation of this rule as most of the brokers were found taking more than a month to complete this process,” Narayan Prasad Timsina, a senior official of Nepse, said.

According to a Nepse regulation, brokers must not take more than three days, after trading of sharers, to transfer ownership of stocks as well as payment.

If brokers violate this rule, Nepse can slap a fine of 0.05 percent of the trading amount per day for up to 15 days. The regulation also gives the authority to Nepse to deduct the sum from the amount deposited by brokers at the stock exchange.

“If brokers continue to violate the rule, we will slap a fine on them,” a Nepse official said on condition of anonymity.

Source: Republica