NEPSE to remove price difference between ordinary and promoter shares

ShareSansar, March 24:

Nepal Stock Exchange Limited (NEPSE) is planning to remove the price difference of ordinary and promoter shares to address various problems stemming from the discrepancy.

According to NEPSE General Manager Sitaram Thapaliya, promoter shares of all the listed companies will now be carried out through block trading.

So far the only auctioned promoter shares of banking and financial institutions are being traded through a separate manual window.

In the new arrangement, the price of promoter shares will be determined by the market on the mutual agreement of the buyers and sellers.

To make the necessary legal arrangement for this, NEPSE is planning to amend its regulations regarding the trading.

NEPSE is planning to hold extensive discussion with the stakeholders to incorporate other necessary changes to the existing regulations, and submit a draft of a new regulations  to SEBON for its approval at the earliest.

The proposed regulations also aims to allow block trade of more than 10,000 units of shares—both ordinary and promoter ones.

The move is aimed at controlling huge fluctuation in the market due to big transactions.

The proposed regulations clearly stipulates that block trading will be mandatory for trading of 10 thousand or more scrips of any company whose paid-up capital is up to Rs 10 crore.

Similarly, block trading of 20 thousand or more scrips of companies with paid-up of Rs 10 crore to Rs 1 arba and block trading of 30 thousand or more scrips of compaies with paid-up of more than Rs 1.1 arba will be mandatory under the new provision.

This will eventually end the difference between the price of ordinary and promoter shares, according to NEPSE officials.

Sweeping reforms on the offing

Likewise, NEPSE will now treat the scrips traded through blank transfer (BT) as ordinary transaction. This provision will be in place until CDS does not come into full operation.

NEPSE is also mulling stern policy to the listed companies, investors and brokers to make share market more transparent and disciplined, officials further informed, adding that they were also planning to bring a provision pertaining to bad transfer of share ownership.

The provision is being enforced in the wake of the ownership transfer row of some of the Nepal Bangladesh Bank shares.

The new regulations also envisages establishment of Clearing and Settlement Fund.