Paper share certificates becoming history

KATHMANDU, NOV 29 -

The Nepal Stock Exchange (Nepse) plans to make paperless transactions compulsory for sellers of shares of banks too from January 16. Currently, only buyers are covered by this provision.

Nepse formally launched paperless electronic transactions of shares on October 8 with CDS & Clearing Limited (CDSCL) allowing buyers to own digital stock certificates of banks.

Nepse spokesperson Sambhu Pant said they had planned to implement the paperless system for both buyers and sellers of stocks of commercial banks in the next one and a half months. “From then onwards, sellers too will have to convert their paper certificates into demat form in order to sell them.”

At present, buyers have to accept electronic share certificates of banks while the provision is voluntary for sellers. Pant said sellers with physical certificates could open a demat account (electronic account) through a depository participant (DP), an agent appointed by CDSCL. Currently, 23 companies have obtained DP licences, including Civil Capital Market, Ace Capital, Investment Management and DP, Nabil Investment Banking, NIBL Capital Markets, Laxmi Capital Mar-ket and Everest Bank. Seven other firms are in the process of obtaining permits.

According to CDSCL, investors can carry out share transactions with their Beneficiary Owned Identification Number provided by the DPs. So far, more than 2.8 million paper stock certificates of 63 registered companies have been changed into digital form.

The implementation of paperless transactions aims to end various problems related with stock trading. Narendra Raj Sijapati, president of the Nepal Stockbrokers’ Association, said electronic documentation would allow transactions to be conducted in less time than it would take with physical shares.

As per working procedure on dematerialisation of physical shares, payment has to be settled within three days of the transaction.

According to Sijapati, it can take from 10 days to even a month to process ownership transfer under the present system.

Meanwhile, Nepse is planning to implement entirely electronic clearance of stock transactions from mid-April. “We have targeted to implement the system for all types of trading groups from the beginning of the Nepali New Year,” Pant said.

Source: The Kathmandu Post