Sebon slashes OTC transaction fees by 90 percent

Published On: July 23, 2016 12:10 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 23: Following reduction of brokerage commission by 40 percent, Securities Board of Nepal (Sebon) has also brought down service charge on transaction of Over-the-counter (OTC) market by almost 90 percent.

Sebon's decision to reduce transaction fee by Nepal Stock Exchange (Nepse), which administers the OTC market, is intended to encourage the OTC market, according to officials.

OTC is a security traded in some context other than on a formal exchange, according to Investopedia.

Sebon has reduced the service charge to 0.2 percent from 2 percent of the total transaction for transaction amount up to Rs 25,000. Similarly, the service charge has come down to 0.18 percent from 1.5 percent for transactions above Rs 25,001 to Rs 50,000. Similarly, investors will have to pay 0.1 percent as service charge for transactions worth more than Rs 50,001. Earlier, such charge was 1 percent.

"We have decided to bring down transaction cost of OTC following request from Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and other stakeholders. The OTC market in Nepal is in a preliminary stage and the decision to cut the transaction cost will encourage more investors and companies to come to the OTC market," said Rewat Bahadur Karki, chairman of the Sebon, said.

The OTC market was not in use until Sebon took a lead in December last year by activating the market in collaboration with Office of Company Registrar (OCR).

According to Niraj Giri, spokesperson of Sebon, there has been a transaction of around Rs 3 million to Rs 4 million so far after the capital market activated the OTC market.

Investors of public companies registered in OCR but not listed in Nepse as well as delisted companies use the OTC market for share transactions.

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