Subsidiary company of Citizen Investment Trust permitted to work as a securities dealer

Published On: January 23, 2021 03:16 PM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Jan 23: The Securities Board of Nepal (Sebon) has permitted Nagarik Stock Dealer Company Ltd, a subsidiary of Citizen Investment Trust (CIT), to work as a securities dealer.

A securities dealer, also called a market dealer, is expected to help maintain stability in the stock exchange market. The institutions licensed as market dealers are allowed to buy and sell securities for themselves as opposed to stockbrokers who act on behalf of their customers. Securities dealers are also allowed to underwrite stocks of listed companies.

Sebon was supposed to issue licenses of market dealers immediately after Nepal Stock Exchange launched the full-fledged online trading system on November 6, 2018. The CIT applied at Sebon to receive the license in April 2019. However, the slow work of Sebon to amend the Securities Businessperson Regulations 2008 deferred the date of the commencement of the country’s first securities dealer by almost two years.

As per the regulations, a securities dealer is required to have a minimum paid-up capital of Rs 20 million and the prescribed infrastructure. Corporate houses need to open a subsidiary company to operate as securities dealers.

Nagarik Stock Dealer Company has a paid-up capital of Rs 5 billion out of which 30 percent or shares worth Rs 1.50 billion will be issued to the general public. In the company, CIT has an investment of Rs 2.50 billion (51 percent stake) while Nepal Telecom and Nepal Reinsurance Company have investments of Rs 500 million (10 percent stake) and Rs 450 million (9 percent stake), respectively.

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