Market Watch

Trading outside valley for all: NEPSE

Published by Octron on January 20, 2010

The Nepal Stock Exchange (NEPSE) has raised the hopes of stock brokers that all of them may be allowed to expand their services outside the Kathmandu Valley by assuring them that it would give it a thought. NEPSE had planned to allow a maximum of 12 brokers to set up branches in Biratnagar, Birgunj, Pokhara, Butwal, Nepalgunj and Narayanghat — two in each city — following its decision to expand the secondary market to other parts of the country. There are 23 licensed stock brokers in the country.

After the brokers demanded that at least four of them be allowed to operate in each city, NEPSE assured them that it would try to manage it as far as possible. NEPSE spokesman Shambhu Pant said that the stock exchange would try to give all the brokers a chance to expand their services outside the valley in case it proved technically feasible. “We are serious about the brokers’ concern that it would be prejudicial to give permits to only some of them,” he said.

Stock broker Jagadish Agrawal said that they had asked NEPSE to allow all the brokers to operate in at least one city. NEPSE has called brokers to apply for licenses to set up offices elsewhere in the country following its decision to spread the secondary market outside the capital even before the central depository system has been established. NEPSE received 92 applications to establish branches in 16 cities while it has decided to expand the capital market to just six cities.

There were 16 applications to establish branches in Pokhara while Biratnagar was the choice of 11 applications. Nepalgunj was the least attractive with only one broker applying to set up an office here. NEPSE chairman Tanka Paneru said that it could start share trading outside the Kathmandu Valley from the first week of February. NEPSE officials, however, are not so confident about the chances of success of expanding the secondary market outside Kathmandu as brokers representing both sellers and buyers would have to sign a single document for clearance and settlement purposes. “The brokers should use courier service for sending the document to Kathmandu for clearance and settlement,” a NEPSE official said. “Our courier service is not so efficient.”

Paneru said that NEPSE would allow shares to be traded and cleared within six days outside the Valley while the NEPSE has provisioned that all tasks should be completed within four days in Kathmandu. After the CDS system is installed, all trading, clearance and settlement process will go online replacing the existing manual works.

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