10 New Brokerage Houses Receive LOI From NEPSE in Second Phase

Ten new brokerage houses have received letter of intent (LOI)/preliminary license from the Nepal Stock Exchange (NEPSE). 

Talking to Sharesansar correspondent over the phone, Head of Supervision at NEPSE Giriraj Dahal confirmed that in the second phase ten new brokerage houses have received letter of intent also called as preliminary license from NEPSE. 

In the same manner, Dahal also affirmed that KBL Securities Limited has not applied for membership at NEPSE. 

He said,"KBL Securities has not applied." 

Similarly, Officer Dahal shared that there is the possibility of providing brokerage numbers to new brokers from 61. 

"As of now, brokers with number up to 60 are operational. We are to officially decide on the numbers to be provided to new brokerage houses. Although, there is the possibility to provide continual broker numbers from 61 to new brokers," he added. 

Officer Dahal said that the seven brokers which had received LOI from NEPSE in the first phase are yet to receive final approval of membership.

He said, "The seven brokers are yet to submit authorized representative letter from SEBON in line with Securities Businessperson (Stock Broker, Securities Dealer and Market Maker) Regulations, 2064 (2008). In addition, the meeting of the BOD which will be held in a day or two will decide on the matter," he said.

As of now, the Securities Board of Nepal (SEBON) has approved licenses for 18 companies in two different phases after fulfulling infrastructural pre-requisites. In the first phase seven broker licenses under the limited brokerage services were approved. The seven new companies includes Bhole Ganesh Securities Limited, Capital Max Securities Limited, Himalayan Brokerage Company Limited, Sun Securities Private Limited, Miyo Securities Private Limited, Sharepro Securities Private Limited and Property Wizard Limited. 

In the second phase, 11 additional brokerage houses received licences after fulfulling infrastructural pre-requisite. 

Following the approval, Mega Stock Markets Limited can extend its services as a full operating securities broker. Additionally, Nabil Securities Limited, the lone applicant for a broker company with a dealer’s license, had its application approved. 

The Nepal Stock Exchange (NEPSE) is currently engaged in inspecting the infrastructure of new brokers in the market. These brokers are required to prepare their infrastructure in accordance with the provisions outlined in the Securities Transactions (Third Amendment) Regulations, 2079. Compliance with these regulations includes the appointment of IT manpower as stipulated. Once the infrastructure is prepared, NEPSE will provide an API to establish a connection for testing purposes. API is the acronym for Application Programming Interface, which is a software intermediary that allows communication between NEPSE's storage of data and the entity that wants the data.

It should be noted that the API provided for one trading member cannot be used by another member. Following a successful API test without any issues detected, the system will be granted permission to operate regularly. Prior to that, the necessary groundwork must be completed, including the corn business. The new brokers will use NEPSE's TMS (Trading Management System) to conduct their operations.

Moreover, after obtaining permission from NEPSE, brokers will be required to obtain membership from CDS and Clearing Limited (Central Depository System). Once this process is completed, brokers can commence their business activities.

Presently, brokers are actively involved in staff management, and infrastructure preparation, as they work towards becoming operational in the market.

The remaining nine companies' licenses were approved granting them to work as limited securities broker which included Elite Stock House Limited, Infinity Securities Limited, Index Securities Limited, Shubkamana Securities Private Limited, Hatemalo Financial Services Private Limited, Money World Share Exchange Private Limited, Machhapuchhre Securities Limited, Kalash Stock Market Private Limited and KBL Securities Limited (which has not yet sought NEPSE membership).