Kumari Securities (Stockbroker No. 1) and Ashutosh Brokerage and Securities (Stockbroker No. 8) were among those firms that were prohibited from securities trading.
Also banned from trading were Pragyan Securities (Stockbroker No. 10), Nepal Investment and Securities Trading (Stockbroker No. 19) and Midas Stock Broking Company (Stockbroker No. 21). Dipshikha Dhitopatra Karobar Company (Stockbroker No. 38) and Kalika Securities (Stockbroker No. 46) were also companies that were barred from securities trading on Monday.
“These firms were barred from daily securities trading after they failed to settle the payment after three days of share transaction,” Nepse Spokesperson Shambhu Pant told Republica. “They will be allowed to resume transaction only after they settle the dues.”
Nepse bans brokerage companies from participating in daily trading based on information provided by the Central Depository System and Clearing Limited, a Nepse subsidiary which looks after works related to clearing and settlement of securities, including ownership transfer of stocks and bonds, and payment clearance.
Narendra Sijapati, president of the Stockbrokers Association Nepal, said that seven brokerage companies faced the wrath of Nepse on Monday because of banda called by different political parties on Sunday. “Because of the strike, which brought vehicle movement to a complete halt, many stockbrokers could not carry out their day-to-day works,” Sijapati said.
This, however, does not mean banda is the only reason that prevents brokerage companies from settling their dues on time. “Most of the time investors who purchase shares fail to make payment on time or issue checks that ultimately bounce. Sometimes signatures on checks do not match with those archived in banks, which also leads to delay in payment,” Sijapati said. “Because of these errors made by investors, stockbrokers usually have to suffer.”
As per the Securities Trading, Clearance and Settlement Regulation, stockbrokers have to complete share transaction and payment settlement process within four days of trading of stocks. This means brokers buying shares and brokers selling shares will get only three days -- excluding the day when shares were traded -- to wrap up the process of handing over money and stock ownership certificates to brokers selling and buying stocks, respectively.
Currently, over 55 brokerage companies are operating in the country.
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