Friday, July 22, 2016

Sebon slashes OTC fee

Following the reduction of brokerage commission, Securities Board of Nepal (Sebon) has slashed the transaction fee charged while trading shares in Over-The-Counter (OTC) market by up to 90 per cent.
For transactions of up to Rs 25,000 in the OTC market, the new charge has been slashed by 90 per cent to 0.20 per cent from 2 percent, whereas for transactions of Rs 25,001 to Rs 50,000, the fee has been reduced by 88 per cent to 0.18 per cent from 1.5 percent, the board said, adding that for trading of above Rs 50,001, the fee has been cut by 85 per cent to 0.15 per cent from 1 per cent.
Investors of public companies registered in OCR but not listed in Nepse as well as delisted companies use the OTC market for share transactions. Likewise, public companies, whose shares are not traded in the secondary market, are required to register with the Office of Company Registrar to allow trading of their shares in OTC market.
There has been a transaction of around Rs 3 million to Rs 4 million so far after the capital market started the OTC market, according to the Sebon. "The OTC market in Nepal is in a preliminary stage and the decision to cut the transaction cost will encourage more investors and companies to come to the OTC market," according to chairman of the Sebon Rewat Bahadur Karki.
The OTC market was not in use until Sebon took a lead in December last year by activating the market in collaboration with Office of Company Registrar (OCR). OTC is a security traded in some context other than on a formal exchange.
The regulatory authority of the capital market has – considering lukewarm response of investors to OTC market and recommendations of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) – reduced transaction charges hoping that the downwards revision will attract more investors to the OTC market and also help fuel growth of the overall securities market.

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