Securities Board to lower stockbrokers’ commissions

As the investors have been repeatedly complaining of the highest stock brokerage commission in Nepal among South Asian countries, the capital market regulator is mulling to lower stock brokers commission.
According to the Securities Board of Nepal (Sebon), it has formed a four-member study team to revise the commission rate of brokerages to give relief to investors. “An increased trade volume on the Nepal Stock Exchange has prompted the regulator to rethink brokerage commissions,” the regulator said, adding that the implementation of a full-fledged online system has also helped reduce the administrative cost of brokerage companies substantially.
The revision in commission will help attract more investors in the secondary market, the board claimed.
Currently, the board allows brokerage companies to charge 0.4 per cent to 0.6 per cent of the total trading amount as commission. But the investors have been asking the government to lower the rate of brokers’ commissions as according to them, Nepali stock brokerage firms are charging the highest commission among the South Asian countries.
The brokers can charge 0.6 per cent commission on a trading amount of up to Rs 50,000; 0.5 per cent on the trading amount of Rs 50,000 to Rs 500,000; and 0.4 per cent if the trading amount exceeds Rs 500,000.
The capital market regulator had previously too slashed the brokerage commission. Before July 2016, the stock brokerage firms used to charge from 0.7 per cent to 1 per cent commission. The stock brokers had – following the regulator’s move – halted trading for a day to protest the lowering of the commission.
Currently, also the stock brokers seem not happy with the regulator’s move to lower the commission as according to them, the transaction volumes have shrunk due to the bearish trend in the market.
Though, the regulator has claimed that the implementation of online system has reduced the cost of operation of the brokerage firms, the brokers donot agree with the regulator. “With the implementation of the online system, stockbrokers have to bear the extra cost,” Stock Brokers Association-Nepal (SBAN) president Bharat Ranabhat said, adding that depending on transaction volume, a broker has to pay at least Rs 50,000 per month in fees for access to the data centre being operated by YCO.
Nepal Stock Exchange has launched a new platform named ‘NEPSE Online Trading System’ last November, providing direct access to individual investors and allowing them to invest in shares themselves. YCO – a vendor company – developed the online software for the Nepse. The system has replaced the traditional system of stock trading which needed a lot of paperwork but charges the brokers fee on the basis of the transaction volume.
Likewise, the stockbrokers also have to pay a levy charge to the regulator. “Out of the net profit, brokers pay 15 per cent TDS – tax deduction at source – to the government, 20 per cent to Nepse and 0.6 per cent to the board.
According to the regulator, it has started implementing the 58-point recommendations forwarded by the Finance Ministry last December. The recommendation has suggested the regulator introduce policies to ensure better transparency in the secondary market and address its multiple structural and operational issues, apart from enforcing the rule for brokerage companies to spend one per cent of their net profit on investor literacy. 

Nepse scales new high, transaction also nears Rs 2 billion

Liquidity surplus in the banking system, attraction of rights and bonus shares of bank and financial institutions and insurance companies to raise their paid-up capital, and bullish sentiment of investors pushed the share market today to a new record high with the benchmark index approaching near 1,600 points. Along with continuing its bullish run, the market also posted record intra-day transaction of Rs 1.96 billion.
The Nepal Stock Exchange (Nepse) index jumped by 31.26 points to close at the market at 1,597.96 points due to commercial banks that gained 47.47 points.
All trading groups, except Hydropower, ended on the green zone today.
However, today's growth was led by commercial banks. A surge in the transaction of Nepal Bangladesh Bank shares pushed the commercial bank sub-index 47.47 points higher.
Nepal Bangladesh Bank has proposed issuing 80 per cent rights shares, which boosted the demand for its shares, resulting in the transaction of Rs 355.86 million today.
The share market has been in bullish trend for the past few months also due to the full-fledged implementation of dematerialised form of share trading from January 15.
Last Thursday too, the daily transaction at the stock market had set the record of high single day transaction of Rs 1.89 billion.
The excess liquidity in banking system and less investment opportunity has made the stock market lucrative investment opportunity, according ot the stock market analysts.
They also say that investors are finding it beneficial to invest in the stock market rather than park their hard-earned money in banks and financial institutions that offer average interest rates of around 5.8 percent on fixed deposits, let alone savings accounts that attract the minimum interest rates.
According to former president of Stock Brokers Association of Nepal (SBAN) Anjan Raj Poudyal the banks are offering margin lending at 8 to 9 percent interest rate as the banking system is flush with excess liquidity.
According to central bank, banks and financial institutions have extended a total of Rs 35 billion against share pledges in the first nine months of the current fiscal year, a jump by nearly Rs 11 billion compared to the corresponding period of the last fiscal year 2014-15. They had floated Rs 24 billion in margin lending in first nine months of the last fiscal year.
Till last year, average daily turnover of the stock market used to be around Rs 350 million only. However, the increase in turnover today is also due to bulk trading of promoter shares of some listed companies.

Peace deal pushes Nepse up?

The prospect of logical conclusion of peace process has lifted the spirit of investors pushing the share market up by 16.61 points today.
The index that stood at 330.21 points as the stock market opened for business surged to 346.82 points as the market was shut down by the operation of third circuit breaker before one hour of regular trading. The stock prices of the listed companies went through massive surge today so that the circuit breakers were triggered for three times.
"The political consensus of yesterday has been received as harbinger of better times in the capital market so the investors purchased shares even paying a little higher with the expectation for future increment in share price," said president of Stock Brokers Association of Nepal (SBAN) Anjan Raj Poudel.
However, some experts doubt the sustainability of market. They claimed that some of the big investors might have taken benefit as they were waiting to exit from the market. “If the market continues to look up, then only we can claim that the peace deal has boosted market confidence,” they added.