Kathmandu, August 3

Nepal Stock Exchange (Nepse) will soon appoint another financial institution as a clearing bank to expedite the clearance and settlement of payments related to securities transaction.

“Nepse will create standards to appoint a new clearing bank. Such clearing bank will be selected through a competitive process,” a press statement issued today by Nepse says.

Stock investors and brokerage companies have long been demanding that Nepse hire another bank to conduct works related to clearing and settlement of payments, as the number of investors and trading amount started going up in the stock market with the launch of fully automated share trading and securities ownership transfer services.

Earlier, the Securities Board of Nepal (SEBON), the securities market regulator, had also directed Nepse to increase the number of clearing banks to expedite clearance and settlement process.

Currently, only one bank, Global IME, is operating as a clearing bank for securities transactions.

“Nepse is positive about adding a clearing bank. But adjustments have to be first made to the software of CDS and Clearing Ltd,” says the Nepse statement. “In this regard, Nepse has already asked CMC Ltd of India, which developed the entire system of CDS and Clearing Ltd, to look into the matter.”

Yet, the software of the CDS and Clearing Ltd has not been upgraded till date, as CMC Ltd was later acquired by Tata Consultancy Service of India, adds the release. Since Nepse had not entered into annual maintenance agreement (AMC) with Tata at the time of CMC Ltd’s acquisition, the process of upgrading the software was delayed.

“But Nepse has now signed AMC with Tata and is jointly conducting phase-wise studies to modify the system. Nepse and Tata need to do a comprehensive study on this matter, as the existing system recognises a single bank as a clearing bank and we do not want to encounter technical glitches once another bank is included in the system,” adds statement.