Kathmandu, May 26
As incidents of share traders opening fake accounts by using other people’s documents has started rising, the Securities Board of Nepal (SEBON) has proposed biometric authentication for traders and investors when they buy or sell stocks.
“Aimed at improving cyber security and curtailing the use of fake accounts, this is part of a long list of recommendations made by the market regulator to the government related to changes required in the stock exchanges and for brokers for the upcoming fiscal budget,” said a senior official from SEBON seeking anonymity.
“We have already framed a draft for the purpose and forwarded the suggestion to the Finance Ministry,” he said. “The proposal deals with provisions related to security issues regarding applications installed on mobile devices, computers and tablets,” the source added. “We are planning to implement a secure two-factor biometric authentication mechanism.”
“At present, there are some investors involved in buying and selling shares by using the documents of their immediate family members and other relatives, which is a wrong practice. No individual is allowed to use other people’s documents for share transactions,” he said.
Meanwhile, Nepal DP Ltd (NDPL) and Agricultural Development Bank Ltd (ADBL) have started utilising a centralised ‘Know Your Customer’ system to authenticate investors and their documents. At present, NDPL and ADBL are also using fingerprint biometric system for investors.
If the biometric system is implemented, it would require investors to use touch ID-enabled devices for trading and sharing biometric features like fingerprints or eye scans to access their trading and demat accounts.
According to the source, the system will provide more security to the service providers and account holders.
As per the draft, after the system is implemented even share brokers will not have the authority to view the personal details of investors.
A high-level official from the Ministry of Finance, said that the biometric system that SEBON has proposed is for the security of the investors.
As per him, the biometric authentication system is practiced in western countries.
“In India too, the Securities and Exchange Board of India proposed the biometric system for stock trading via mobile applications last year and the process to implement it is underway.”