NEPSE resends the Margin Trading Workplans to SEBON for final approval; full-fledged margin lending to take off soon

Nepal Stock Exchange (NEPSE) after making necessary modifications and addition to the Margin trading procedures has submitted the same to the regulator Securities Board of Nepal (SEBON). An official with NEPSE informed that it has added few more points to the earlier proposed working procedures following the suggestions from SEBON and is expecting to hear back from market regulator. The revision is basically about the contracts the investors will be having with the stock brokers at the time of availing the margin facility. Moreover, the newly made changes have also made it mandatory for the investors to open accounts at broker firms.

On the other hand, SEBON officials are of opinion that the board will take some more time to review the changes submitted by NEPSE and have shown commitment that the full-fledged margin trading facility will come online soon if there’s no other issues remaining with the submission from NEPSE. After the proper implementation of margin lending facility, the share market that has been witnessing a phenomenal slump for more than a year is expected to receive some respite.

Earlier, NEPSE had issued a working procedure for margin lending facility on Kartik 24, 2074 that had outline 23 points in order to facilitate the credit facility from the stock brokers. However, the brokers had been vehemently opposing few points outlined in the directives including the requirement that these stock brokers are expected to maintain gross asset worth of Rs 5 crore in order to be eligible to extend credit facilities.

As per the provisions outlined in the regulation, investors can avail the credit facility from the brokers only for those companies with more than 10K shareholders, which has positive net worth and has been providing minimum 10% bonus for the last 2 consecutive years.