Changes Has Been Made to the Three-Tier Share Broker System; Company With Rs 15 Crore Paid Up Capital Can Apply For Broker License

Through the Ministry of Finance, the Council of Ministers was made aware of the amendment request from the Securities Board of Nepal (SEBON) to distribute three-level broker licenses.

The regulations include a three-tier share broker system planned. There will be three different licenses offered: general securities dealer, full operating securities broker service, and limited working securities broker service.

As per the latest amendments, the paid-up capital of the securities brokerage service company with limited operations has reached Rs. 15 Crores. Similarly, fully functioning securities brokerage services have reached Rs 50 crores and securities dealers have reached Rs 1 Arba.

Previously, the paid-up capital of the broker company was divided into three levels: Rs. 20 Crores, Rs. 60 Crores, and Rs. 1.5 Arba. Likewise, the ceiling of the proposed paid-up capital has been adjusted.

According to the current system, a securities brokerage company could be established if there was a paid-up capital of Rs. 2 crores. Similarly, only a limited number of broker licenses were being distributed. But now any company which fulfills the stipulated rules can apply for a broker license in the stock exchange within the first month of every financial year.

The Board has also established the cost of the license for share brokers, which is broken down into three types based on level.

The charge for a securities dealer license will be the most expensive under the current proposal, costing Rs 1 crore, whereas for the limited broker service Rs 25 lakh and for the full operating securities broker service Rs 50 lakh. While the dealer application fee is Rs. 2 lakhs.

Currently, there are 50 licensed stock brokerage companies and only Nagarik Stock Dealer holds a license of stock dealer. 

Similarly, every year renewal fee for a broker license has to be paid. The board will charge an annual renewal fee of Rs. 5 Lakh for the dealer license.

The application fee for a fully functioning securities broker license is Rs 1 Lakh and that of general securities broker service is Rs 50,000. Similarly, fully functioning securities broker license holders will pay an annual fee of Rs 3 lakh for renewal.

Anyone who meets the requirements of the new regulations is qualified to be registered as a securities broker.