Brokers agitated over preparations to bring banks into brokerage business

Published On: February 28, 2019 11:31 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 28: Stock brokers have warned to launch protest against the Securities Board of Nepal (Sebon) over recent remarks of the latter's chairperson about brokerage firms.

The Stock Brokers Association of Nepal (SBAN) submitted its memorandum to the Sebon last week, condemning the statement of Sebon President Rewat Bahadur Karki in a recent meeting of a parliamentary committee. 

In the meeting, Karki had raised concerns over the lack of corporate governance, professionalism and capacity of stock brokers. While the Stock Broker's Association of Nepal (SBAN) has pointed out the remarks of Sebon Chairman, the fury of stock brokers seemed to be directed against the recent reforms pursued and implemented by the Sebon – particularly preparation to bring subsidiaries of banking institutions to work as a stock brokerage firms.

With an objective to foster competition in the securities market, the Sebon has taken a lead in paving the way for banks to work as stock brokers through their subsidiaries. However, brokerage firms have been opposing the decision.

Though they have put forth various demands with the Sebon, their disappointment seemed to be driven from the preparation to allow commercial banks to work as stock brokers through their subsidiaries. 

In their memorandum to the Sebon, they have raised concerns over the decision to increase stock brokers in the country. 

“What is the reason of working adamantly to increase the number of securities businesspersons without expanding the access of secondary market through sub brokers and broker agents? Should not Sebon Chairman Rewat Bahadur Karki prove the rationale?” read the memorandum submitted jointly by 50 brokerage firms. 

The SBAN has warned to launch protest against the Sebon if its demands are not addressed. 

Concluding that the remarks against stock brokers have affected the capital market, they have also demanded apology from the Sebon Chairman. 

However, Sebon has said that the any protest by stock brokers will create inconvenience for investors and make adverse impact in the market. Issuing a statement on Tuesday, the Sebon has urged stock brokers to maintain restraint and help in the development and expansion of the stock market.

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