The drastic fall in transaction volume at broker companies has dragged down commissions for Nepse and the Securities Board of Nepal (Sebon) by around 120 million and Rs 5.5 million respectively compared to the amounts paid in the earlier fiscal year. [break]
Total transaction of securities through stockbrokers was Rs 2.34 billion, down from Rs 4.3 billion a year earlier, according to data compiled by the Securities Board of Nepal (Sebon), the capital market regulator.
If the total net commission earned by brokers during the year 2008/09 after deducting commissions for Nepse is anything to go by, the amount has dropped by around Rs 145 million during 2009/10. During fiscal year 2008/09, brokers earned net commission of Rs 264.78 million.
Brokers are paying 25 percent of the total commission collected from investors, which is one percent of the total transaction amount.
Similarly, the Sebon commission paid by brokers during fiscal year 2009/10 dropped sharply to Rs 7.04 million from Rs 12.9 million, paid at the rate of 0.03 percent of total turnover at broker companies.
“Perennial slowdown in the stock market has directly impacted the commission paid by stockbrokers, which is directly proportional to the transaction amount,” Niraj Giri, spokesperson of Sebon, told Republica. Nepse, which is regarded as the barometer of investor confidence in the stock market, has dropped to an over 50-month low, hovering around the 400 points mark, down from the all time high of 1,175.38 points recorded on August 31, 2008.
Sebon had given permission to stockbrokers to expand their services to other cities outside Kathmandu Valley in the hope that wider access to brokerage companies would boost overall stock transactions.
Stockbroker companies have opened branches in Birgunj, Biratnagar, Narayanghat, Butwal, Pokhara and Nepalgunj. They said the number of investors approaching to exchange shares has dropped by over 75 percent compared to a couple of years ago.
“One brokerage office is receiving hardly 25 investors a day on average whereas the number used to be as high as 100,” said Nanda Kishore Mundada, proprietor of brokerage firm Shree Krishna Securities. Mundada, who is also president of Nepal Stockbrokers Association, added that the sluggish stock market is all set to impact the contribution to revenue as income tax from brokers.
Top five Stockbrokers in terms of turnover during 2009/10
Agrawal Securities -- Rs 2,280 million
Nepal Stock House -- Rs 1,734 million
Ashutosh Brokerage Securities -- Rs 1,538 million
Shree Krishna Securities -- Rs 1,466 million
ABC Securities -- Rs 1,442 million
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