The Nepal Stock Exchange (Nepse) is planning to issue licences to new brokerage firms that would allow them to operate their business at the provincial level.
Replying the capital market regulator, the front line regulator said it will invite interested companies to operate brokerages at each of the country’s seven provinces after its preparation.
The Securities Board of Nepal (Sebon) had directed the Nepse and CDS and Clearing last week to report on the progress of implementation of its policies related to licencing. The policies – based on the 58-point recommendations made by the Finance Ministry last December – was expected to ensure better transparency in the secondary market, and address its multiple structural and operational issues.
The regulator has also reminded Nepse that it has missed out on providing banks with brokerage licences, appointment of market dealers and reducing the number of days for transaction settlement. The regulator also said that the establishment of an investors’ protection fund by Nepse is still pending.
The stockbrokers are, however not sure, if the licences allowing new brokerages to operate in the provinces would help their business. “The existing brokers have been operating from the provinces through a number of remote workstations which haven’t yielded good earnings,” according to a broker, who has started office in one of the provincial capitals.
Nepse – in 2017 – had allowed 50 brokerage companies operating in Kathmandu to open their branch offices outside the Kathmandu Valley and operating via remote workstations. According to Nepse, a total of 56 such remote work stations have come into operations. These are mainly based in Biratnagar, Birgunj, Dharan, Pokhara, Narayanghat, Itahari, Nepalgunj, Butwal, Dharan, Pokhara and Dhangadhi.
According to the Nepse, the domestic stock market registered stock trading worth Rs 110 billion in 2018-19, of which most remote workstations earn Rs 500,000 to Rs 600,000 on average in a trading day. “Based on the broker’s commission of 0.6 per cent at present, a single workstation earns a daily average income of Rs 4,000,” they said, adding that out of the income, brokers need to pay 15 per cent in income tax and 20 per cent as fees for Nepse and Sebon, following which only a tiny amount is left for the brokerage firm. The leftover amount is hardly enough to cover the expenses of four employees and office rent.
Replying the capital market regulator, the front line regulator said it will invite interested companies to operate brokerages at each of the country’s seven provinces after its preparation.
The Securities Board of Nepal (Sebon) had directed the Nepse and CDS and Clearing last week to report on the progress of implementation of its policies related to licencing. The policies – based on the 58-point recommendations made by the Finance Ministry last December – was expected to ensure better transparency in the secondary market, and address its multiple structural and operational issues.
The regulator has also reminded Nepse that it has missed out on providing banks with brokerage licences, appointment of market dealers and reducing the number of days for transaction settlement. The regulator also said that the establishment of an investors’ protection fund by Nepse is still pending.
The stockbrokers are, however not sure, if the licences allowing new brokerages to operate in the provinces would help their business. “The existing brokers have been operating from the provinces through a number of remote workstations which haven’t yielded good earnings,” according to a broker, who has started office in one of the provincial capitals.
Nepse – in 2017 – had allowed 50 brokerage companies operating in Kathmandu to open their branch offices outside the Kathmandu Valley and operating via remote workstations. According to Nepse, a total of 56 such remote work stations have come into operations. These are mainly based in Biratnagar, Birgunj, Dharan, Pokhara, Narayanghat, Itahari, Nepalgunj, Butwal, Dharan, Pokhara and Dhangadhi.
According to the Nepse, the domestic stock market registered stock trading worth Rs 110 billion in 2018-19, of which most remote workstations earn Rs 500,000 to Rs 600,000 on average in a trading day. “Based on the broker’s commission of 0.6 per cent at present, a single workstation earns a daily average income of Rs 4,000,” they said, adding that out of the income, brokers need to pay 15 per cent in income tax and 20 per cent as fees for Nepse and Sebon, following which only a tiny amount is left for the brokerage firm. The leftover amount is hardly enough to cover the expenses of four employees and office rent.
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