Full automated trading will begin in current fiscal year: Officials
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Online share-trading system to go live in two months
KATHMANDU, Sept 1: Nepal Stock Exchange (Nepse) has finally started the long-awaited process of embracing fully automated online trading (AOT) system.
Though beginning of automated trading system has been doing rounds for the past few years, Nepse invited bids from interested firms to supply, deliver, install and commission such advanced form of securities trading system only recently.
Sitaram Thapaliya, general manager of Nepse, told Republica that the exchange company plans to install the fully automated online trading system within the current fiscal year 2015/16. "We have kept both options open - upgrading to a new system or installing new system. Interested bidders will submit their bids as per the conditions set as per the report of the consultant that we have hired for advising us on implementation of fully automated online trading system," said Thapaliya.
Nepse has set the deadline to submit bids at September 27.
Currently, the stock market has been using semi-automated system under which where investors are required to visit the office of brokers to buy or sell their securities. Nepse had introduced the automated screen-based trading on August 24, 2007 under the support of Asian Development Bank, ending the traditional open-out-cry system form of trading.
The five-year contract for semi-automated trading of shares with British firm COMDAQ came to an end in 2012. Nepse, however, has been renewing the annual maintenance contract (AMC) with the vendor every year instead of installing a new system.
Rewat Bahadur Karki, former CEO of Nepse who introduced the semi-automated trading, told Republica that trading without upgrading the system could be risky. "It should have been upgraded earlier. The service that we had taken was only for five years. But running outdated system could pose risk to trading," he warned.
With fully automated trading coming into implementation, the trading process is expected to be simpler and faster which will also increase the turnover and transaction in the stock market.
Speaking at a press meet held last year, Securities Board of Nepal (Sebon) chairman Babu Ram Shrestha had estimated that average daily turnover at the stock exchange can climb to Rs 1 billion once CDS and automated trading of securities come into operation. "Once the CDS and Clearing (CDSC) Ltd starts operation and the online trading of stocks begins, trading of shares will go beyond the capital city. Also non-resident Nepalis can invest on securities. This will increase daily turnover to Rs 1 billion," Shrestha had said.
Stock brokers also say trading will become simpler and quicker once the fully automated online trading system comes into implementation. "Trading, clearing and settlement cycle gets shortened once the fully automated trading begins. It will ultimately raise transactions in the stock market," Anjan Raj Poudyal, former president of Stock Brokers' Association of Nepal (SBAN), told Republica.
"At present, brokers have to work on trading platform for executing buying and selling order, central depository system (CDS) software for clearance and settlement of securities, and their own back office system. As systems are not interlinked, we are required to make multiple data entry which is a time consuming and manual process," Poudyal, who also runs Thrive Brokerage, said. "The installation of fully automated trading system will end this problem."
According to Nepse officials, installation of Internet-based fully automated trading system will interlink all processes of trading like listing of securities, trading, clearing and settlement, supervision, surveillance, and risk management.
With the new modernized system coming into implementation, investors will not be required to visit their brokers' office for trading. "Investors can buy or sell securities from their computers or smartphones once this system starts full-fledged operation," added Thapaliya.