Minister for Finance Shankar Prasad Koirala inaugurated the service known as Central Depository System (CDS) amid a program on Monday.[break]
Speaking on the occasion, Koirala said the introduction of CDS in the country´s stock market would help in the development of capital and financial markets. He said the government would come up with favorable policies to promote securities market.
The newly formulated Securities Transactions, Clearance and Settlement Regulations by Securities Board of Nepal (Sebon) had paved the way for CDS and Clearing Ltd to start the electronic transaction of stocks in the country´s sole security market.
Though the government had initially planned to introduce CDS a couple of years ago, the plan had not materialized in the absence of necessary regulation to govern it.
Now that CDS has been launched, investors are hopeful that settlement of share transactions would be fast and hassle-free.
Nepal Rastra Bank Governor Dr Yuba Raj Khatiwada said the introduction of CDS will attract big and institutional investors into the stock market. “It is a step forward in the journey of enabling our stock market compete with other leading stock markets of the world,” added Khatiwada. He also suggested the investors to increase investment in securities rather than gold.
“Our stock market will develop if you increase investment in securities. Investment in gold will take our money out of the country,” he added.
The CDS and Clearing Ltd has settling share transactions through manual system since November, 2012.
“The CDS will enable investors to immediately sell or buy shares along with instant transfer of ownership,” said Subodh Sharma Sigdel, CEO of CDS and Clearing Ltd.
Process of clearing and settlement of share transactions will be completed with the joint involvement of Depository Participants (DPs), share issuing companies, share registrar, clearing members and settlement agencies.
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