SEBON Has Finally Succeeded in Opening a New Broker License; Board Can Now Reduce the Broker Commission At Any Time

The Securities Board (SEBON) has finally been successful in opening a new broker license despite numerous obstacles along the way. 

In accordance with the Securities Dealers (Securities Brokers and Securities Dealers) Regulations, 2064 (Fifth Amendment), every three years after the issuance of the securities broker and securities dealer's license for the first time, the board shall study the physical facilities available in the securities market, the needs of the market, the competition situation, and call for a new license for the securities broker and securities dealer.

This means that even if the board approves a new broker license now, it won't be available for three years, and even then, it won't be opened until there is a demand.

However, obtaining a broker license is not easy as it seems because, in accordance with the updated regulations, the paid-up capital of fully operational securities brokers is Rs. 60 crores, the paid-up capital of limited trading securities brokers is Rs. 20 crores and the paid-up capital of the securities dealer is Rs. 1.50 arba.

Likewise, the rights of the board that were curtailed in the fourth amendment, that the board cannot reduce broker commission have been revised through the Fifth Amendment. After the authority is restored, the board can now reduce the broker commission at any time with the permission of the Ministry of Finance.

Now, let’s look into the criteria set by the board for different positions as per the fifth amendment.

What are the criteria to be the BOD of the new broker company?

Chairman of Board of Directors and the executive head:

For Executive Head: Master's degree in economics, commerce, finance, law, or information technology from a recognized university or chartered accountancy and at least five years of working experience.

Likewise, in the case of directors, at least five years of working experience in the relevant field with at least a bachelor's degree or equivalent.