SEBON directs NEPSE to set up Settlement Guarantee Fund of Rs 1 arba to address the issue of delayed payment from stockbrokers

Securities Exchange Board of Nepal (SEBON), under the provision of Securities Listing and Transaction Bylaw 2075, has made an arrangement for Settlement Guarantee Fund in order to ensure a settlement guarantee within the stipulated T+2 payment cycle in the stock market.

The board has enforced the new provision after it received multiple complaints from the share investors about not receiving the payment for their sold stock as per the T+2 timeline. The new fund/pool of money will be constituted with the contribution of the stock exchange, settlement fund service providers, settlement members, and the stock brokers.

As per the directives of the SEBON, such a pool of money will be set up with a fund of Rs 50 crore within the end of FY 2077-78, Rs 80 crore within the end of FY 2078-79, and Rs 1 arba within FY 2079-80. The stock exchange will make a contribution of 50% of the total fund, 30% by settlement fund providers, and 20% by the settlement partners and stockbrokers.

Likewise, the board has also made it mandatory for the stock exchange and settlement fund managers to deposit additional fund of 1% of the daily average turnover recorded by each stock broker in the proceeding month within 15^th of every month so that the fund can be immune from any possible future risks, as per the media statement. The stock brokers are also obligated to make further contributions to the fund in case the average transaction amount during the latest month exceeds the amount of the previous month where these brokers are obligated to pay that exceeding amount to the fund.