Nepse GM accuses Sebon of delaying the automation processs
KATHMANDU, Dec 28: The process to develop fully automated online trading system has faced a roadblock due to differences between Nepal Stock Exchange (Nepse) and Securities Board of Nepal (Sebon).
The dispute between the country's sole stock exchange company and the market regulator began when Nepse selected a firm, YCO Pvt Ltd, for supply, delivery, installation and commissioning of the fully automated online trading system on February 16.
Unhappy over the choice of the vendor, Sebon instructed the exchange company to bring in 'a tested system to harmonize it with the international system' which should also be credible for cross border trading/listing as well as for the entry of nonresident Nepali and foreign institutional investors.
Now, the Nepse is pointing finger at the Sebon for the delay in introducing online trading system.
With the dispute between the two government agencies delaying the process for the vendor to get advance payment for its services, YCO Pvt Ltd moved the court, making the case even more complex.
As the case is sub judice, the much-awaited stock market modernization plan is set to be delayed further.
The Sebon has also raised question over vendor selection process.
However, Nepse has defended the selection process stating that the vendor was chosen according to the Public Procurement Act, 2007. "We have received two letters from Sebon. While the first letter has ordered the Nepse to introduce the tested system on its consent, the second letter states that it was the responsibility of Nepse to replace or reform the trading system," Sitaram Thapaliya, general manager of Nepse, said, organizing a press meet in Kathmandu on Tuesday.
“The lengthy correspondence between the Nepse and the Sebon has delayed the process to release advance payment to the vendor, prompting it to move the court. This has brought the entire process to a standstill," he added.
In the press meet, Nepse even released all the letters exchanged between the two institutions.
Though Nepse claimed in its letter to the Sebon that it was also involved in the process to devise terms of reference (ToR) for the procurement as well as the presence of Sebon board member in its meeting, Sebon, in its response letter, has categorically denied such claims.
However, investors say that the stock market has been taken hostage by the ongoing dispute between the two government agencies. “This seems to be purely ego clashes between officials of two institutions,” Dipendra Agrawal, an executive member of Nepal Investors' Forum -- a lobby group of stock investors, told Republica. "It is their duty and responsibility to carry out market reforms. But they are involved in ego fights," he added.
When asked in the pres meet about the ongoing feud between the Nepse and the Sebon, Nepse General Manager Thapaliya accused that it was an attempt of smearing his character in media.
Nepse freefall continues
Nepal Stock Exchange (Nepse) index dived 25.04 points, or 1.75 percent, on Tuesday to close the day at 1,407.53 points.
Share prices are coming down as investors continue to offload their holding in the bearish market. Tightening of bank funds in the wake of liquidity crunch in the banking system is one of the reasons behind stocks route, according to stock market analysts.
The stock market, which was on a gaining streak for nearly three years largely fuelled by cheaper bank loans, is now down by nearly 25 percent, or 474 points, from its peak of 1,881.45 points on July 27.
Shares of only 17 companies, including NB Insurance Company, Machapuchchhre Bank Ltd and Pokhara Finance, went up on Tuesday. Sub-indices of all the trading groups ended in the red zone on the day.