SEBON asks Nepse to allow new broker firms outside valley
Kathmandu, December 3
Even as the Securities Board of Nepal (SEBON) and Nepal Stock Exchange (Nepse) were in discussions over plans to expand the number of brokerage firms, SEBON has directed the country’s sole secondary market to allow the opening of new brokerage firms outside the Kathmandu Valley.
Now, interested companies will be able to open new broker firms and provide stock trading services in places outside the Kathmandu Valley.
“Since the country has already adopted the federal system of governance it is now necessary to open new broker companies outside the Valley too,” reads a statement issued by SEBON today.
According to SEBON — the stock and commodities market regulator of the country — it has directed Nepse to add more number of broker companies across the country. As per SEBON’s guideline, the broker companies will have to apply for the broker’s licence only after Nepse gives the concerned company the go-ahead.
According to SEBON, the secondary stock market has to be expanded at the local and provincial levels and cover all 77 districts of the country. “It is necessary to allow broker companies to be opened outside the Valley so that investors from remote areas can also be involved in the secondary market,” the statement reads, adding that at present it is difficult for people from remote areas to do so.
Meanwhile, existing brokerage firms have already started providing services from their remote work station (RWS) since last year after SEBON directed them to extend their services outside the Valley. The regulator had also mentioned that if the broker firms failed to so then it would revoke their ‘log-in’ accounts.
According to SEBON, 41 broker companies out of the existing 59 have opened their branches outside Kathmandu so far.
Nepse had started the process to expand share trading services to other major cities outside the Valley in January 2016.
According to SEBON, it is in a position to provide 250 additional ‘log-in’ windows to brokers to expand their services.
The regulator has stated that the expansion of services to other major cities will end the compulsion of investors to come to the capital city to sell or buy stocks. Meanwhile, Nepse is already providing trading services from major cities like Biratnagar, Birgunj, Dharan, Pokhara, Narayanghat, Dhangadi, Itahari and Nepalgunj, among others.
However, total trading turnover and number of transactions outside Kathmandu is still around 10 per cent of the total turnover and transaction at Nepse.