NEPSE to Remain Open During Lockdown; Online trading is facilitated

NEPSE, the only securities market of Nepal, has decided to remain open during the course of the lockdown.

Kathmandu is going through a week-long lockdown from today midnight. From tomorrow, non-essential gathering and transportation will be strictly prohibited. Similarly, numerous other districts of Nepal are already in lockdown because of the rising Covid-19 cases.

It seems as though the government was totally unable to implement precautionary measures in the three-months lockdown, but that issue alone will make a whole another news article.

The stock market remaining open during the lockdown means that investors will have to trade their shares online. However, based on the list of broker-wise client profile as of August 13, it is seen that only about 20% of investors trade online. As such, it is a question as to whether the market being open is actually worth it.

Furthermore, not being able to participate in the market, investors who don't trade online might have to watch their stocks plunge or miss out on buying opportunities.

Even though the online trading system has been implemented in NEPSE, there are a number of reasons why investors refrain from using the online trading portal.

First, not many investors know how to operate on an electronic gadget. For a middle-aged, working-class man who invests a portion of his income in stocks, money and digital technology don't go on the same plate. They fear losing their hard-earned money simply because of an incorrectly pressed button. Although NEPSE and SEBON have repeatedly stated that it is the broker companies' responsibility to teach clients how to use the online system, the whole issue has become like a game of Hot Potato where everyone gives their best to put the hot ball away (the responsibility) before he gets caught holding it.

Second, the online trading system is often an annoyance, even for people comfortable with digital technology. NEPSE sometimes freezes when it is soaring up, and you will miss the action if you are not trading from the broker floor. While placing a buy or sell order via the online portal, the site buffers, causing investors to wonder whether the system is actually looking for other buyers and sellers or just staying there dumb.

Additionally, some broker companies are also found to discourage the use of the online trading portal. When an investor (who chose to remain anonymous) wanted to activate online trading systems for all her family members, her broker put it bluntly - "One online system for one family is enough. You don't need a different account to trade the 10 stocks you buy in the IPO." She informed Sharesansar that her family trades a significant volume of stocks and not just the IPO shares. As ridiculous as it sounds, there are a hundred other complaints that investors have about the broker companies, including their unreliability and lack of proper customer service.

As such, it is unclear as to whom NEPSE wants to serve by remaining open, given that even the online system isn't fully online, because one also has to visit the broker office to receive payment and load funds.

Sharesansar called NEPSE CEO Mr. Chandra Singh Saud to know of his personal and official viewpoint.

According to Mr. Saud, NEPSE had consulted with SEBON on the matter.

Keeping in mind the Property Rights of the investors that state that every citizen should be able to buy or sell their property freely, Mr. Saud says that freezing their shares in NEPSE would go against investor rights.

When asked about whether the market will go efficiently since only 20% of investors trade online, Mr. Saud said that even though the total number of investors seems significantly higher than those who trade online, most active investors already have an online account. 

Thus, investors without an online trading account are passive investors who hold for the long term, according to Mr. Saud. This is why he believes the completely online trading system during the lockdown will benefit investors, rather than go against them.

Mr. Chandra Saud had also mentioned that investors can activate their online trading system without visiting the broker offices physically. To analyze that scenario, Sharesansar called Mr. Bharat Ranabhat, chairman of the Stock Broker Association of Nepal (SBAN).

Mr. Ranabhat also provided solidarity to Saud's statement and said that many stockbroker companies have provided the application for online account opening on their respective website. Investors can submit necessary documents with the form via email and get their account activated.

Furthermore, Mr. Bharat Ranabhat said that many investors call their broker to place their orders rather than visit the offices even at the present. Thus, he asserts that the lockdown will not bring a significant change in the trading facilities.

As a news agency, it is Sharesansar's responsibility to dissipate information from a neutral perspective without fear or favor.

From our neutral stance, it seems that the concerned authorities are confident that keeping the stock exchange open is the best move forward. 

As an investor, how do you feel about this decision? Do you fully support it or are you affected in any way? We highly value your opinion in the comment section below.