Sebon to keep open the lower band of the brokerage commission rate

Published On: August 10, 2023 09:05 PM NPT By: Republica | @RepublicaNepal

The measure is expected to allow flexibility in brokerage commission mainly to promote the competition in stock exchange market: Sebon

KATHMANDU, Aug 10: The Securities Board of Nepal (Sebon) has started a workout to revise the existing threshold of the commission of brokerage companies citing to promote competition in the stock exchange market.

According to a Sebon official, the regulator has been looking forward to removing the lower band of the existing commission range. As of now, the board has been fixing both the lower band and the upper band of the commission rates being charged by the stockbrokers.

After undergoing immense pressure, the Sebon since the past two and a half years, has reduced the brokerage commission rates ranging between 0.27 percent and 0.4 percent. Earlier, the rates were between 0.4 percent and 0.6 percent.

“We are making it open-ended in the new context,” said Ramesh Hamal, chairman of the Sebon. “It means stockbrokers cannot cross the upper limit of 0.4 percent, however, they can fix any lower value as per their convenience.”

At present, a brokerage company can take 0.4 percent commission in transaction amount of up to Rs 50,000. The rate on transaction threshold between Rs 50,000 and Rs 500,000 has been fixed at 0.37 percent.

An investor needs to pay 0.34 percent commission for a transaction between Rs 500,000 and Rs 2 million and 0.3 percent for a transaction between Rs 2 million and Rs 10 million. For all transactions above Rs 10 million, the investors need to pay a service charge of 0.27 percent to the brokerage company.

Recently, the Sebon has issued licenses to 17 new brokerage companies, while there were 50 such companies working in the market previously. There are around 5.8 million investors investing in the country’s secondary market.

Provided the new rule is implemented, a stockbroker can take the commission even below the existing rate of 0.27 percent. This is expected to attract many new investors in the secondary market, according to the Sebon officials.