Share demat service to be expanded across the country by mid-July

KATHMANDU, Jan 23: With the paperless trading system coming into full operation since Sunday, investors will be able to dematerialize shares from any parts of the country from mid-July this year.

So far, the dematerializing service of securities is available only in 44 districts.


Speaking at an interaction 'Issues on Full Automation with Regard to CSD Services and Role of Market Participants' organized by Securities Board of Nepal (Sebon) on Friday, Dev Prakash Gupta, CEO of Central Depository System and Clearing Ltd (CDSCL), said that they were making preparation to expand the service in all 75 districts by mid-July. "We are preparing to expand CDS service in all 75 districts of the country within next six months. We hope depository participants will reach to all parts of the country, offering the dematerialization service to investors by that time," added Gupta.

Likewise, Sebon has announced that investors will be able to receive bonus shares directly into their debit accounts from next week. "We will be issuing a circular next week, which will require issue manager and listed companies to send bonus shares to the investors directly into their demat account. Investors will no longer be required to visit companies to receive bonus shares," Rewat Bahadur Karki, chairman of Sebon, said. He also said that the capital market regulator was also planning to introduce electronic system for initial public offering (IPO) in the near future.

Also speaking at the program, Niranjan Phuyal, deputy manager of Nepse, said that the implementation of CDS has also paved the way for taking securities trading outside the Kathmandu Valley. "Currently, securities trading is more or less limited to Kathmandu Valley as trading in few other cities accounts for a meager 3 percent of the total turnover. With the CDS coming into full-fledged operation, such trading can be now expanded to other cities as well," he said. "Nepse is planning to set up at least one remote working station in every district. But the facility of pre-trade service, trading service and post trading service should go parallel."

The enforcement of full-fledged CDS as part of stock trading modernization is considered a milestone in Nepal's secondary market. Nearly 310.83 million units of shares of 172 companies have already been dematerialized for trading in Nepse. Among others, paper-less trading of securities helps to shorten the share ownership transfer process to four trading days. Earlier, it would take at least 15 days to complete ownership process.

The new system is also expected to end manipulation of the market.

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