Ministry of Finance Approves Reduction in Stockbroker Commissions

The Ministry of Finance (MoF) has given the green light to the Securities Board of Nepal (SEBON) to decrease the commission rates charged by stockbrokers. Finance Minister Barshaman Pun recently approved SEBON's proposal to reduce these rates, which was decided upon during a SEBON board meeting held on October 18, 2023.

Under the previous system, investors were paying stockbrokers commissions ranging from 0.27 percent to 0.40 percent based on their transaction volume. However, the new provision sets the commission rates between 0.243 percent and 0.36 percent, representing a reduction. This decision aims to make trading more affordable and attractive for investors.

The previous commission rates, revised on December 27, 2020, varied based on transaction amounts. For instance, transactions up to Rs 50,000 incurred a 0.40 percent commission, while transactions between Rs 50,000 and Rs 500,000 had a commission rate of 0.37 percent. This pattern continued for transactions up to Rs 10 million, with the commission decreasing as the transaction amount increased.

Furthermore, a service charge was applicable for the purchase and sale of government or institutional bonds. This charge ranged from 0.10 percent for transactions up to Rs 50,000 to 0.02 percent for amounts exceeding Rs 5 million.

Under the new rule, the commission rates for various transaction amounts have been adjusted. For example, transactions up to Rs 50,000 will now incur a 0.36 percent commission, while transactions between Rs 50,000 and Rs 500,000 will have a 0.33 percent commission.

The approval for these changes came after approximately six months of SEBON proposing the reduction in commissions. It's worth noting that SEBON has been operating without a chairperson since the departure of the former chairman Ramesh Hamal in January. In the interim, Joint Secretary Ritesh Shakya has been acting as the chairperson of SEBON, holding delegated authority from the MoF.