Plan to start semi-online trading system in limboThe Securities Board of Nepal (Sebon)’s plan to enforce semi-online trading system has hit a snag, as stockbrokers have expressed reluctance to make use of the platform, which, according to them, is not linked to the stock market.
The Securities Board of Nepal (Sebon)’s plan to enforce semi-online trading system has hit a snag, as stockbrokers have expressed reluctance to make use of the platform, which, according to them, is not linked to the stock market.
The securities market regulatory had introduced the semi-online trading system as part of the plan to fully automate stock trading in the country. But stockbrokers
are of the view that the proposed semi-online system might not help ease trading, as it is not linked to payment gateways and Nepal Stock Exchange (Nepse).
The system that the Sebon wants to put into use enables share investors to post their buying and selling orders over the internet without having to make a trip to their stockbroker’s office. Through the system, the regulator has been expecting to reduce hassles to both stockbrokers and their customers.
According to the Sebon, introduction of the semi-online system would also lay the groundwork for the launch of the fully automated system, which is likely to be introduced next year. Last week, the regulator also forwarded circular to stockbrokers to initiate the process of using the semi-online system.
Parmeshwor Bhakta Malla, managing director of Malla and Malla Stock Brokering Company, said the system that the Sebon is planning to introduce may not help ease the trading, as it is not linked with Nepse. “In fully automated system, orders placed by share investors reach the stock market. But in semi-automated system, the orders land at our system. We then have to process them and forward them to Nepse. So, putting a system that only allows investors to place orders will barely solve the problem, because orders can be placed through telephone as well,” Malla said.
Under the proposed semi-online system, stockbrokers need to maintain investors’ records in order management system which the brokers have been maintaining as a backup function in their offices. The brokers are reported to be using software named Mandala or Boss for their office backup.
Narendra Raj Sijapati, managing director of Kalika Securities, said the plan that Sebon has forwarded was unclear. “The proposed semi-online system is silent on payment settlement,” he said.
A stockbroker under the condition of anonymity criticised the Sebon for making a pointless move. “As Nepse is the authorised body to enforce the system, the regulator’s intervention is undesirable,” said the stockbroker.
However, Sebon said that the delay in implementing the fully automated system had prompted the regulator to make the move. Sebon Spokesperson Niraj Giri said discussions were being held with stockbrokers regarding the matter.
“As brokerage companies can launch the semi-online system using the software they currently own, it will not add financial burden on them,” Giri said. “The system will provide an option to stockbrokers to enhance their services.”
To use the semi-online system, investors have to provide their bank details to their stockbroker. Based on the details, stockbrokers can settle the transaction with the investors, as per Sebon.