Kathmandu, September 23 :

In order to modernise the stock market and bring transparency to share trading, Nepal Stock Exchange Ltd (NSEL) is to make the stock market fully automated from November 2006.

Rewat Bahadur Karki, general manager of NSEL, told The Himalayan Times that $300,000 is being spent on the automation programme, which will start in November 2006. Karki informed that the amount is a loan from the Asian Development Bank (ADB) under the corporate and financial governance (CFG) project.

After full automation of the stock market, the transaction volume of the market would increase and reforms can be realised, hoped Karki. It will also bring about a competitive environment in the market. There will be competition also among issue managers in the primary market after automation, he said.

Dr Dandapani Poudel, former economic advisor at Nepal Rastra Bank and current board director at the Rastriya Banijya Bank (RBB) said that automation of the stock market is a fundamental requirement, which will help gradually reform the market by removing manipulations, getting out from the perplex-web of manual share dealings and settlement of shares through banking channels.

Dr Poudel is much concerned over the fact that currently certain people are cheating investors, due to the weak transaction system and manipulation of shares. After full automation, the chances of hanky-panky would go away, he said.

Karki said that the number of brokers would also increase to about 50 and artificial share prices would not be floated in the stock market, as automation would bring in competition.

However, Dr Poudel thinks that automation alone is not enough to advance stock market. Stock market authorities need to seriously think about creating awareness about stock dealing and its possible returns among even common investors, which will help expand the market in the end. Currently, ordinary people do not know how the stock market really works and how they can get benefits, Dr Poudel said.

The NSEL and Securities Board have to pay serious heed to strengthen the mechanism for making Nepali stock market an attractive investment destination, Dr Poudel said.

In the second phase, a central depository system (CDS) needs to be implemented along with efficient manpower to bring it at par with the international stock trading systems.