Nepse plans to upgrade trading system
KATHMANDU, MAR 06:
Investors might soon be able to place trading orders through mobile phones and the internet, as Nepal Stock Exchange (Nepse) is planning to replace the existing trading system.
Nepse, that needed to upgrade its trading system since some time, has started homework on upgrading its system. It held an interaction today with Nepali software vendors to inform them on the requirements of the new trading system.
“We will need features that allow internet and mobile device based order placement service in the new system,” informed chairman of Nepse Dr Jibanath Dhital.
Nepse informed software vendors about features of the current trading system and those required for the new one. The stock exchange will ask for Expression of Interest from local software companies for developing the trading system.
“We need a trading system that can process about 1000 orders within a minute, and it should also support the trading of new instruments later on. Likewise, trading needs to be compatible with central depository system,” added Dr Dhital.
Nepse is looking for a system that can take price quotes of various securities instruments such as stocks, bonds, debentures and eventually derivatives. The existing system also lacks a window for share trading by market makers.
A couple of years back, Nepse had shortlisted Singapore Exchange, Bombay Stock Exchange and Korea Stock Exchange for developing the software but things did not materialise.
In the absence of a home-based order placement system, the Nepali stock market has remained elusive to Non-Resident Nepalis (NRN). NRNs require a trading system that allows them to place buy and sell orders in the trading system directly through the portal of their brokers on the system.
Likewise, the current system fails to detect any wrongdoings in real time and many crafty investors and brokers can get away by taking advantage of the loopholes in the system. Nepse needs a new software that can flag and even stop the transaction mid-way if something seems wrong.
Nepse, that had started operations in 1994, used the open-out-cry system for trading until August, 2007. In 2007, Nepse moved to screen-based trading by setting up Wide Area Network that enabled brokers to be connected with Nepse’s server from their offices. The partial automation of stock trading has helped boost transaction volume.
However, last year, Nepse witnessed many counts of trading halts due to system crash. The stock exchange had to extend trading hours to compensate for the time lost due to system failure. Nepse even had to operate its back-up server to normalise trading.
The current set up is also not enough to sustain the number of brokers in operation. The stock exchange needs to provide an outlet to 59 brokers including those operating outside the valley while its capacity is only 50.
Source: THT
