Securities
Board of Nepal (Sebon) has reduced the net worth requirement for stock brokers
by 50 per cent to Rs 5 million to make Central Depository System (CDS)
functional as soon as possible.
The board
meeting of the capital market regulator on Friday decided to slash the net worth
requirement for brokerage firms to make smoothen the process of incorporating
them as depository participants (DPs) in the CDS and Clearing Ltd. Depository Participants
are intermediaries between the depository – the CDS – and the investors. The CDS
that is the central depository for equity, bonds, and warrants that handles securities
in dematerialised form.
The Board
has forwarded the decision to the Finance Ministry for its approval.
The
stock brokers have been reluctant
in becoming Depository Participants due to higher net worth required, according
to Securities’ CDS Regulation 2067. The current Regulation has prescribed a minimum
net worth of Rs 10 million for the brokerage firms to be Depository Participants.
Taking their
suggestions, the Sebon has also decided to amend the Regulation to address the the
stock brokers concern.
Some 35 brokerage firms
have however become Clearing Members.
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