NRN investment guide to capital market
KATHMANDU:
The wheels have been turned in motion to bring in Non Resident Nepalese (NRN) investment in the securities market.
A committee is being formed consisting of representatives from Securities Board of Nepal (Sebon), Nepal Rastra Bank (NRB), Company Registrar Office (CRO) and Insurance Board to frame guidelines regarding NRN investment in Nepali capital market.
“The committee will discuss the rules and regulations for their investment and design the guidelines in a way so as to eliminate possible cases of clash of regulations imposed by different regulatory bodies,” informed director of Sebon Niraj Giri. The government had opened capital market investment for NRNs in last fiscal year’s budget however, due to practical complications regarding the entry and exit of foreign retail capital, it has remained in the papers only.
Current fiscal year’s budget has directed Sebon to prepare necessary guidelines regarding NRN investment in securities market within mid-October 2011. Sebon has permitted NRN investment in securities market through portfolio investors back in December 2010. According to Portfolio Management regulations, NRNs can appoint licensed portfolio managers to undertake investment on their behalf.
However, there are difficulties regarding the exit mechanism for the returns and fund that NRNs have invested. As a preventive measure to capital flight, there are some complications posed by Nepal Rastra Bank (NRB) regarding the exit mechanism.
“There is no legal restriction on NRN investment as of now they can even opt for portfolio managers; however, we can not expect them to invest if they can not take back their money,” Giri said.
The guidelines prepared by committee will work out the procedure so that obstacles in attracting NRN investment in the capital market.
“The central bank along with other regulatory bodies will prepare guidelines that will define the procedures for investment and disinvestment by NRNs in securities,” said spokesperson for Nepal Rastra Bank (NRB) Bhaskar Mani Gyanwali.
NRN investment is supposed to aid the capital market in balancing its demand supply mechanism. At present, the stock market is heaving under the supply pressure
However, the policy measures alone will not help attracting the foreign investors in the stock trading the infrastructures also need to support the policies. The stock exchange and brokers need to provide the NRNs, who reside in different locations around the world over a platform to undertake transactions.
It is not possible in the existing technology. “Thus, Nepal Stock Exchange is trying to get its trading software upgraded to incorporate online trading as well.
Moreover, the tendency of listed companies flouting the regulations even on the matter of submitting proper financial disclosure on time will be a huge turn-off for the well-informed foreign investors.
Investors under scanner
Securities Board of Nepal (Sebon) is creating a database of investment companies engaged in share market. “In the recent times, the investment companies are undertaking bulk transactions, thus we are scrutinising them to make sure that manipulations and insider trading does not take place,” Sebon director Niraj Giri, said, adding that once Central Depository System comes into operations there will not be difficulty in figuring out the identity.
Source: THT
The wheels have been turned in motion to bring in Non Resident Nepalese (NRN) investment in the securities market.
A committee is being formed consisting of representatives from Securities Board of Nepal (Sebon), Nepal Rastra Bank (NRB), Company Registrar Office (CRO) and Insurance Board to frame guidelines regarding NRN investment in Nepali capital market.
“The committee will discuss the rules and regulations for their investment and design the guidelines in a way so as to eliminate possible cases of clash of regulations imposed by different regulatory bodies,” informed director of Sebon Niraj Giri. The government had opened capital market investment for NRNs in last fiscal year’s budget however, due to practical complications regarding the entry and exit of foreign retail capital, it has remained in the papers only.
Current fiscal year’s budget has directed Sebon to prepare necessary guidelines regarding NRN investment in securities market within mid-October 2011. Sebon has permitted NRN investment in securities market through portfolio investors back in December 2010. According to Portfolio Management regulations, NRNs can appoint licensed portfolio managers to undertake investment on their behalf.
However, there are difficulties regarding the exit mechanism for the returns and fund that NRNs have invested. As a preventive measure to capital flight, there are some complications posed by Nepal Rastra Bank (NRB) regarding the exit mechanism.
“There is no legal restriction on NRN investment as of now they can even opt for portfolio managers; however, we can not expect them to invest if they can not take back their money,” Giri said.
The guidelines prepared by committee will work out the procedure so that obstacles in attracting NRN investment in the capital market.
“The central bank along with other regulatory bodies will prepare guidelines that will define the procedures for investment and disinvestment by NRNs in securities,” said spokesperson for Nepal Rastra Bank (NRB) Bhaskar Mani Gyanwali.
NRN investment is supposed to aid the capital market in balancing its demand supply mechanism. At present, the stock market is heaving under the supply pressure
However, the policy measures alone will not help attracting the foreign investors in the stock trading the infrastructures also need to support the policies. The stock exchange and brokers need to provide the NRNs, who reside in different locations around the world over a platform to undertake transactions.
It is not possible in the existing technology. “Thus, Nepal Stock Exchange is trying to get its trading software upgraded to incorporate online trading as well.
Moreover, the tendency of listed companies flouting the regulations even on the matter of submitting proper financial disclosure on time will be a huge turn-off for the well-informed foreign investors.
Investors under scanner
Securities Board of Nepal (Sebon) is creating a database of investment companies engaged in share market. “In the recent times, the investment companies are undertaking bulk transactions, thus we are scrutinising them to make sure that manipulations and insider trading does not take place,” Sebon director Niraj Giri, said, adding that once Central Depository System comes into operations there will not be difficulty in figuring out the identity.
Source: THT
