Three commercial banks – Sanima Bank, NIC Asia Bank and Citizens Bank International – have sought permission from the central bank for opening the subsidiary company to work as a stock brokerage firm.
They have applied for the permission of the central bank to set up their subsidiary companies for securities trading as the Nepal Rastra Bank (NRB) has last week – issuing directives – allowed the banks to work as broker company as a subsidiary company. Earlier, the central bank – in its Monetary Policy for the current Fiscal Year 2018-19 – had promised to introduce a provision for the commercial banks to work as stock broker.
The three commercial banks have sought the central bank’s nod to begin the process of setting up subsidiary for providing securities business services, according to the central bank. "Once the central bank gives them permission, the banks will set up a subsidiary company to provide brokerage service for securities business."
The commercial banks had applied before the directives that had said that a commercial bank can make investment in a subsidiary company with minimum 51 per cent ownership to provide securities businesses. After the central bank green signal, they should also get license from the capital market regulator Securities Board of Nepal (Sebon) to work as securities broker.
There are some 50 securities brokerage firms at present. The Sebon – in its annual plans and programmes – has also promosed to provide broker license to bank.
The central bank has, however, barred such subsidiary company from trading securities of its parent company. These subsidiaries will also not be allowed to provide all securities business services, according to Sebon that also claimed that these brokerage firms will be allowed only to execute the trading order of securities of their clients as stockbroker.
According to the capital market regulator, they cannot also provide other securities business services like investment management, dealership, consultancy services as have been understood by many. "Any bank which wants to work as stock broker should first set up subsidiary and acquire the permission from Nepal Stock Exchange (Nepse) before applying the license with the Sebon."
Stockbroker license to commercial banks is expected to expand the share and other securities trading services outside Kathmandu valley also due to their presence across the country.
They have applied for the permission of the central bank to set up their subsidiary companies for securities trading as the Nepal Rastra Bank (NRB) has last week – issuing directives – allowed the banks to work as broker company as a subsidiary company. Earlier, the central bank – in its Monetary Policy for the current Fiscal Year 2018-19 – had promised to introduce a provision for the commercial banks to work as stock broker.
The three commercial banks have sought the central bank’s nod to begin the process of setting up subsidiary for providing securities business services, according to the central bank. "Once the central bank gives them permission, the banks will set up a subsidiary company to provide brokerage service for securities business."
The commercial banks had applied before the directives that had said that a commercial bank can make investment in a subsidiary company with minimum 51 per cent ownership to provide securities businesses. After the central bank green signal, they should also get license from the capital market regulator Securities Board of Nepal (Sebon) to work as securities broker.
There are some 50 securities brokerage firms at present. The Sebon – in its annual plans and programmes – has also promosed to provide broker license to bank.
The central bank has, however, barred such subsidiary company from trading securities of its parent company. These subsidiaries will also not be allowed to provide all securities business services, according to Sebon that also claimed that these brokerage firms will be allowed only to execute the trading order of securities of their clients as stockbroker.
According to the capital market regulator, they cannot also provide other securities business services like investment management, dealership, consultancy services as have been understood by many. "Any bank which wants to work as stock broker should first set up subsidiary and acquire the permission from Nepal Stock Exchange (Nepse) before applying the license with the Sebon."
Stockbroker license to commercial banks is expected to expand the share and other securities trading services outside Kathmandu valley also due to their presence across the country.
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