Sebon, brokers talks on to include in CDS
KATHMANDU,JAN 30:
The brokers are still busy negotiating with the regulator for eligibility to operate as depository participants (DPs) of the central depository system, though some merchant bankers have already submitted the application.
Four merchant bankers — Civil Capital, Growmore Merchant Banker, Laxmi Capital and Ace Capital — have already submitted their applications to Securities Board of Nepal (Sebon) for the license. “If the applicants are found to be eligible, Sebon will grant license within a couple of weeks,” informed director of Securities Board of Nepal (Sebon) — the capital market regulator — Niraj Giri.
Meanwhile, another bunch of prospective depository participants — stock brokers — are still haggling with Sebon to be granted concession and be allowed to undertake depository participant’s job despite falling short of criteria.
Last week, Sebon had asked the brokers to provide specific reasons why the regulations should be amended for the share brokers and be allowed to opt for the license despite falling short in regards with net worth.
“CDSC bylaws allow depository participants to handle the amount of securities that is 200 times their net worth, brokers can be incorporated depository participants through this rule with the consent of the authorities,” pointed out Giri.
CDS Regulation that requires depository participant to have at least Rs 10 million as net worth to get license has limited the brokers’ chance to work as depository participant since most of the brokerage firms do not have that much net worth. “Earlier, we, alongside the brokers had reached an understanding to work out the ways to allow brokers to work as depository participants since higher the number of depository participants the outreach of capital market will expand, so we will try to incorporate them in a way possible,” said Giri.
The brokers, however, are demanding the amendment in CDS Regulation 2068 as the more preferable route. “Even if are allowed to handle securities 200 times the net worth then also we will be able to handle only limited business,” pointed out president Stock Brokers Association of Nepal Anjan Raj Paudyal.
“We will apply within a week, once the regulator amends the requirement or shows another fitting alternative,” informed Paudyal adding that until then the brokers that have net worth exceeding Rs 10 million will also not apply.
A bank or financial institution, stock broker, registrar and transfer agent, custodian or such other entity as may be prescribed by the board from time to time can work as depository participant, according to the regulation.
“Merchant bankers are more suitable to undertake depository participant’s job as we have better resources and have bigger infrastructure and speciality,” said president of Merchant Bankers Association of Nepal Bhisma Raj Chalise.
In the absence of depository participants, CDSC can not operate as they hold the investor’s records in a dematerialised form like a bank for the securities while CDSC is going to be the clearing house that will settle the account after each share transactions.
Source: THT
