SEBON halts issuance of new licences
Issuing a statement, the securities market regulator has said that the board has halted the licensing process after analysing the market size and need of the companies.
There are altogether six merchant bankers that provide services of issue manager, securities underwriting, share registration, portfolio management and institutional consultancy. Likewise, 10 companies are in operation that provide services of issue manager, securities underwriting, share registration and portfolio management. One company is dedicated to share registration and portfolio management and seven companies are working in the areas of portfolio management.
According to SEBON, seven firms are in the process of taking approval from the board. Of them, five have sought the licence for merchant banking with aforementioned five services and one has applied for merchant banking with four services, except institutional consultancy.
The securities market regulator had raised the capital of merchant bankers up to four folds and also expanded the areas of works to include institutional consultancy services in addition to issue manager, securities underwriting, share registration, portfolio management.
SEBON Executive Director Niraj Giri stated that the board has halted the licensing of new companies in the context of the regulators of financial sector - Nepal Rastra Bank and Insurance Board -halting the new licensing of banks and financial institutions (BFIs) and insurance companies.
Though there are chances that some real sector companies will issue shares to public, there are already sufficient issue managers and share registrars in the market to handle the task. “We have halted the licensing of share registrars and issue managers owing to unhealthy competition in the market,” said Giri. “On the other hand, the role of the issue manager has been minimised along with implementation of Applications Supported by Blocked Amount (ASBA) system.”.
Giri, however, said that SEBON can consider licensing of merchant banks for securities underwriting, portfolio management and institutional consultancy services and a few applications have been taken forward. He further stated that SEBON will not accept applications of issue managers and share registrars until further notice..