KATHMANDU, Aug 27: Nepal Stock Exchange has looked forward to taking stern action against the brokerage companies that are found indulged in malpractices in shares transactions.
After revising the regulation related to supervision of stock trading, the front line regulator of the country’s only share market has stepped up efforts to take stern actions against the stockbrokers involved in misconduct. According to officials, Nepse has forwarded the draft of the regulation to the Securities Board of Nepal (Sebon) for the final approval.
Open branch outside capital: Stockbrokers to Nepse
In the new law, the Nepse has proposed suspending the license of stockbrokers failing to comply with good practices. If a stock brokerage receives a caution notice more than two times in a year from the regulator, its operating license could even be suspended.
Similarly, if the stockbroker fails to provide necessary information to Nepse, if they are found involve in manipulating share prices arbitrarily, if they use alternative software or terminal other than the one provided by the Nepse or if they are found creating unwarranted hassles to their client investors, then the authority concerned will bar the brokers from carrying out their transactions.
If the licensed brokers wish to do trading of shares in the name of their family members, they can do so only after taking prior approval from the regulator. Similarly, Nepse has considered barring stocks trading by investors who have a track record of being involved in criminal activities. Provided the member broker companies fail to produce satisfactory clarification on any issues before the regulator, Nepse can suspend trading by such stockbrokers for 15 days.
According to a Nepse source, the regulator has considered being stern against the stockbrokers citing growing cases related to anomalies by the brokerage companies. Not settling the financial transactions on time and purchase and sales of shares in the name of their near and dear ones, are among the misconducts being practiced by the stockbrokers.
Likewise, Nepse has also proposed to raise the license fees and annual renewal charges for the stockbrokers and stock trading companies by a notable amount. The traders will have to pay Rs 300,000 while full-fledged stockbrokers will have to settle Rs 100,000 renewal fee if the proposed regulation will come into effect in its form.
