SEBON Task Force Proposes Amendment to Broker Regulation 

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SEBON Task Force Proposes Amendment to Broker Regulation 

July 7: The Securities Board of Nepal (SEBON) is preparing to issue three types of broker licenses to help play a supporting role in securities trading.

A task force formed by the SEBON has approved the draft to amend the existing Securities Dealers Regulations, 2064 BS. The board has been working for the stock market development by forming a separate task force. The same team approved the draft to amend the existing Securities Dealers Regulations, 2064 BS so that three different types of broker licenses can be distributed.

Ramesh Hamal, chairman of the board, said that the proposed rules and regulations approved by the task force will be implemented after the board of directors approves them.

“The lack of classification of brokers in the securities business led to multiple complaints. Classification makes securities trading more systematic,” said Hamal.

After the implementation of the amended regulations, the way for the subsidiaries of commercial banks to get broker license will be opened.

The first of the three types of brokers will be issued for the group that only buys and sells shares. This is called a limited range of securities brokers. The minimum paid-up capital of this type of broker is fixed to be Rs 200 million. Similarly, a broker who works as a DP along with buying and selling shares, provides investment advisory services and investment management and also provides services related to margin trading is called a full-fledged securities broker who will be issue the second type of license. The minimum paid-up capital of a broker under the second category is fixed to be Rs 600 million.

The board informed that a stock dealer company will be allowed to operate with the license of the third category.

The minimum repayment capital of the third type of securities brokers is fixed to be Rs 1.5 billion. According to the new arrangement proposed for broker license, a limited range of securities brokers have to pay Rs 2.5 million per annum fee and an annual fee of Rs 150,000.

Similarly, a full-range securities broker will be charged Rs 5 million and the annual fee is Rs 300,000. In the case of securities brokers, the permission fee is Rs 10 million and the annual fee is Rs 500,000. The board informed that the companies that have met the specified paid-up capital and other criteria as per the regulations will be given broker licenses.

The paid-up capital of these brokers ranges from Rs 200 million to Rs 1.5 billion, as informed by the board.

The Stock Brokers Association of Nepal on the other hand objected to the decision of the board. Chairman of the association Santosh Mainali argued that the need for any new policy and directive should be justified before the board implements it. Currently, 50 brokerage firms are working as securities dealers.

 

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