KATHMANDU, July 25: The Securities Board of Nepal (Sebon) has recommended to the Ministry of Finance to fix a paid-up capital requirement of up to Rs 1 billion for new brokerage firms to get a license.
Currently, 50 brokerage firms are working to carry out stock transactions at the Nepal Stock Exchange (Nepse). These broker companies maintain Rs 20 million as their paid up capital.
Sebon Chairman Bhisma Raj Dhungana said they have stepped up efforts to revise the Securities Exchange Regulation 2007 to issue new brokerage licenses soon. “The new rule is being enforced to provide new licenses to both the subsidiaries of banks and individual firms,” he said.
Although the regulator has long been looking to open new licenses, it has not been materialized so far. Provided the new regulation is endorsed in its current form, the brokerage companies will have to maintain a paid up capital between Rs 100 million to Rs 1 billion.
According to Sebon, the existing brokerage companies operating with low working capital have been unable to invest in improved technology related to stocks trading. “By increasing the capital base, new firms will be capable of bringing in advanced technology to offer better services to their clients,” Dhungana said.