Stock brokers face trading block
KATHMANDU, DEC 03:
Due to the delay in the settlement of traded shares, all brokers at the stock exchange were suspended during the first hour of trading today.
Trading of all 48 stock brokers was blocked by Nepse today for the first 45 minutes as their trading limit with stock exchange was insufficient due to the delayed settlement process. The new mode of operations implemented by CDS and Clearing (CDSC), that requires both selling and buying brokers to present documents simultaneously, has slowed down the pace of settlements.
“As the trading limit of all the brokers had become low due to delayed settlements, Nepse at first blocked trading, and later randomly assigned all of us additional limits and the day’s transaction was not disturbed,” said president of Stock Brokers Association of Nepal (SBAN) Anjan Raj Poudyal during a press conference today. Brokers have been opposing the new operation system, calling it impractical.
All brokers maintain an account with the stock exchange, amounting to Rs 50 million. When a broker places a buy order, Nepse deducts the amount required to buy the shares from the broker’s account. And the amount is later restored to the broker’s account when the broker submits the voucher presented by the buyer.
Nepse suspended brokers whose limit was over, due to the delay in settlement. CDSC started the manual settlement of share transactions from October 30 of shares traded since October 17.
“Though CDSC is faster than what Nepse was in clearing and settling transactions, the process itself has become a bigger problem even bringing about a trading block for brokers,” said Poudyal. None of the brokers submitted documents for clearing and settlement to CDSC today.
“CDSC cannot revise the mode of operation on its own, as only the board at CDSC and Nepse have the authority,” said chief executive of CDSC Subodh Sharma Sigdel.
“Since CDSC took up the job, we have been settling transactions quicker. More than 88 per cent of transactions done since October 17 have been settled and cleared,” he added.
Nepse had tried to introduce the system earlier this year but it was not successful following a protest by the brokers. However, when Nepse shifted its clearing and settlement job to CDSC the new mode of operation was implemented.
CDSC does not move ahead with the settlement even if the buying broker submits the vouchers and required documents, if the selling broker delays in submitting the documents.
“This provision has benefited investors, but brokers, who are careless and deliberately delay the submission of documents on time, are the ones to be blamed for the trouble,” pointed out Sigdel. “You cannot punish a broker because another broker fails to do his job properly,” said managing director of Creative Securities — broker number 40 — Dipesh Bhatt.
Source: THT
