KATHMANDU, March 27: With Nepal Stock Exchange (Nepse) and Securities Board of Nepal (Sebon) at the loggerheads over expansion of remote work station (RWS), or branch office, brokerage firms have started provided stock trading services in places outside the Kathmandu Valley.
Though Sebon had urged brokerage firms to wait till Wednesday, they started trading from their branch offices, defying the ‘unofficial instruction’ of the capital market regulator.
According to Priya Raj Regmi, the president of Stock Brokers Association of Nepal (SBAN), seven brokerage firms started trading of securities from six cities across the country from Sunday. This means trading of securities has begun in Nepalgunj, Butwal, Narayangarh, Banepa, Biratnagar and Birtamod. Nine other brokerage firms have already been trading securities in Narayangarh, Biratnagar, Dharan and Pokhara through their branch offices.
The brokerage firms provided services from their RWS, despite the Sebon’s objections on their plan to expand services out of Kathmandu Valley after Nepse warned them that it would revoke their ‘log-in’ accounts of RWS if operations aren’t started immediately.
While the stock exchange company has allowed permits to stock brokerage firms to open their RWS in cities outside the Kathmandu Valley, the Sebon has instructed them to not start trading from the RWS immediately.
Brokerage firms lament that the ‘ego’ clash between the chiefs of the Nepse - the frontline regulator - and the Sebon - the capital market regulator - has affected their business expansion plan. This dispute between the stock exchange company and the capital market regulator over the expansion of RWS has also delayed easy access to stock trading service for investors outside Kathmandu Valley.
While Sebon officials contend that there is a need to make amendment to the regulations governing brokerage firms before stock brokers open their branch office, Nepse has been exerting pressure on brokerage firms to bring their RWS into operation immediately.
Niraj Giri, the spokesperson for Sebon, told Republica that they have verbally urged brokerage firms to wait the decision of the Sebon’s governing board which is meeting on Tuesday. “The meeting will take decision on the issue. There are some concerns regarding the amendment to regulations for paving the way for brokerage firms to open their branch office,” said Giri.
According to Giri, the board is concerned on the plan to allow brokerage firms to open their branch offices without taking capital, infrastructure and possible security risks into consideration.
However, brokerage firms say that they went ahead with their plan to operate RWS as they did not get any written instruction from the board. “This has been the issue of discussion for the past three months. We have been requesting the Sebon to either give us a go-ahead or written instruction to stop our expansion plan. As our frontline regulator Nepse ordered us to immediately start RWS, we expanded operation accordingly,” Priya Raj Regmi, president of SBAN, said. “We accept and implement whatever our regulator tells us to do.”