Monday, February 10, 2014

Sebon reduces net worth requirement for Depository Participants



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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