SEBON grants seven more brockarage licenses

KATHMANDU: Seven new brokerage licenses have been granted, finally ending the syndicate and monopoly of the 50 brokers who currently control the Nepali stock market.

Following an inspection, the Securities Board of Nepal (SEBON) granted the licenses to seven new companies out of the eight companies that had applied after meeting the infrastructure requirements.

The seven new businesses that can now conduct business have been granted licenses in the limited working securities category. Only buying and selling will be permitted under the limited broker licensee’s control, per customer instructions.

There will be three different licenses available: general securities dealer, full operating securities broker service, and limited working securities broker service, in accordance with SEBON’s regulation for the provision of awarding new licenses.

Out of the 46 companies who had previously applied, 43 had received a preliminary license or letter of intent (LOI) in the previous three phases.

It has taken 13 years for new brokerage houses to finally enter the market. Nearly 15 years ago, an additional 27 brokerage houses applied, and after two years, they were granted brokerage licenses; at that point, there were 50 brokers.

At that time, both secondary and primary market operations were handled manually, which was deemed inconvenient, laborious, and accessibility-restrictive. .

The stock market, however, has recently performed a 360-degree somersault in the right direction. Demat account holders have increased dramatically since the online trading management system went into operation, going from 3 lakhs to more than 56 lakhs.

There are now more than 20 lakh investors, up from 25,000 in 2068, even in the secondary market. Similar to this, the CDSC’s most recent statistics show that there are now 83 Licensed Depository Participants (DPs).

Similar to this, the situation from the previous decade, where banks and financial institutions made up the majority of the market capitalization, is gradually changing as a result of the expansion and diversification of the capital market with the listing of companies from across sectors, including hydropower, hotels, and manufacturing in NEPSE. In order to make it easier for even smaller companies to list on the stock market, SEBON also plans to introduce new categories in addition to new companies.

The Board’s recent effort to support a expanding market can be seen in SEBON’s proposal to classify businesses with Rs 25 crores in paid-up capital as Small and Medium Scale Enterprises (SMEs).

In addition, there are now 40 mutual funds listed, and more are scheduled for listing, as opposed to just two or three shares trading in this category over the course of the previous ten years.

Similar to this, the government’s recent announcement to make it easier for Nepalis who are not residents to invest in the capital market and the rise in digital literacy mean that the number of potential clients for the existing brokers is about to increase to the point of being somewhat overwhelming.

In a number of cases, the existing brokers have been accused of providing ineffective services. It is not unusual to hear customers complain about receiving subpar service on multiple occasions, from unanswered customer calls during busy trading hours to delays in payment after the sale of a security.

Even these services have a hefty price tag of 0 point 4% broker commission. The number of brokers has stayed the same at 50 despite a expanding market.

To meet the market’s increasing demand and protect investors’ investments, additional brokerage firms were needed. As a result, SEBON carried out the processes to grant new brokerage licenses in order to meet the demand of the expanding market. .

All parties involved, including the government, the stock market, old and new brokers, the economy, and most importantly the clients, benefit from the emergence of new brokerage houses.

Below are the names of the seven new businesses that can now function as brokerage houses:

1. Bhole Ganesh Securities Limited

2. Capital Max Securities Limited

3. Himalayan Brokerage Company Limited

4. Sun Securities Private Limited

5. Miyo Securities Private Limited

6. Sharepro Securities Private Limited

7. Property Wizard Limited