Issue managers fined for breaking investment rulesThe Securities Board of Nepal (Sebon) fined four issue managers for mutual fund schemes for violating their investment portfolio regulations.
The Securities Board of Nepal (Sebon) fined four issue managers for mutual fund schemes for violating their investment portfolio regulations.
CBIL Capital, Laxmi Capital Market and NMB Capital were fined Rs35,000 each, and NIC Asia Capital was made to pay Rs25,000 as punishment. They were found to have put more than 10 percent of the money collected through mutual fund schemes in fixed deposits at various banks and financial institutions, according to Sebon. As per the Mutual Fund Regulations 2010, issue managers are barred from depositing more than 10 percent of the money collected through mutual fund schemes in banks.
Sebon deputy spokesperson Niranjaya Ghimire said the regulator had been keeping a close watch on the four issue managers for the past four months. According to him, these is the first time Sebon has slapped fines against mutual fund managers.
Citizens Mutual Fund-1 managed by CIBL Capital, NMB Sulav Investment Fund-1 and NMB Hybrid Fund L-1 managed by NMB Capital, Laxmi Equity Fund and Laxmi Value Fund-1 managed by Laxmi Capital, and NIC Asia Growth Fund managed by NIC Asia Capital violated the Mutual Fund Regulations, according to Sebon.
Sebon has moved to implement the recommendations submitted by the panel formed to study problems in the money and capital markets. The Finance Ministry set up the body three weeks ago.
Sebon said in a statement Wednesday that it had started drafting regulations to check insider trading. Sebon spokesperson Niraj Giri said the draft regulations were at the final stage of completion, and that the regulator would be sending it to the ministry for final approval.
Giri said the regulator had also started work to amend the Securities Registration and Issue Regulation, 2016. “Under the new provision, only firms getting a minimum credit score will be allowed to issue primary shares. Similarly, listed firms will be required to issue at least 40 percent of the credit instruments to the public,” Giri said. Sebon is also mulling to enforce a merger and acquisition policy for brokering companies. Among its plans are revising the service fee charged by brokers, facilitating stock trading of companies with a small capital base with an ‘over-the-counter’ platform, reviewing the provision of follow-on public offer, and expanding awareness programmes for investors.
Sebon has asked the Nepal Stock Exchange to issue brokering licences to commercial banks and revise the existing circuit breaker provisions. Currently, the exchange suspends transactions for 15 minutes if the index goes up or down by 3 percent. In the event of a 4 percent movement, trading is suspended for 30 minutes. Share transactions are halted for the day if the the index fluctuates by 5 percent.
“As the rule seems to distort the market, the regulator has planned to revise it as per international practice,” Sebon said. Establishing an Investors Protection Fund and Settlement Guarantee Fund and settling transactions on the next day following the trade are among Sebon’s plans. Currently, CDS and Clearing settles cash transactions within three days after the trade.