PAN mandatory for stock investors from FY 2018/19

Published On: September 4, 2017 02:20 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Sept 3: The Securities Board of Nepal (Sebon) is preparing to make permanent account number (PAN) card mandatory for investors in the stock market. 

According to officials of the capital market regulator, a new rule that requires investors to mandatorily have PAN card while investing in the secondary market will come into effect from the upcoming Fiscal Year 2018/19.

The Sebon is preparing to introduce the new provision after its plan to issue identification card for investors failed to materialize. According to Sebon officials, the mandatory PAN requirement provision is aimed at maintaining database of investors. 

“As we do not have any data of investors, making PAN mandatory for investors will help to create unique identity for all investors,” said Niranjaya Ghimire, a deputy director at the Legal Enforcement, Stock Exchange and Businesspersons Section of the Sebon. “This will help to maintain investors' registry and could also help to maintain know-your-customer documentation,” he added. 

As there is not exact data about investors with the Sebon so far, it is believed that such requirement will the capital market regulator to have such data once the rule comes into effect.
Based on demat account, Sebon estimates that there are 1.5 million investors in the secondary market. “Since an investor tend to open multiple accounts, it, however, is difficult to have exact data of investors. There is no way to know what the background of these investors is, whether they are regular and what they do,” said Ghimire.

While there is KYC Registration Agency to maintain central database of investors, on behalf of capital market intermediaries registered with the Indian capital market regulator, Nepal is yet to have even the accurate number of investors.

Meanwhile, Sebon is preparing to bring a regulation for venture capital and private equity fund after carrying out necessary study in the current fiscal year. Other plans of the stock market regulator, among others, include setting up of Securities Market Institute, facilitating the establishment of a new stock exchange company on corporate model, implementing the system to allow investors to place buy/sell order through Internet, and carrying out a study to allow brokerage firms to expand their operation scope to do business like margin lending and consultancy services, among others.

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