Sebon approves real-time verification system for IPO applicants

KATHMANDU: Investors in Nepal’s stock exchange market can now expect to receive instant notifications regarding the status of their applications to purchase primary shares, following the approval of new procedures by the Securities Board of Nepal (Sebon).

Sebon recently greenlit a comprehensive guideline, which has been forwarded to CDS and Clearing for implementation. This system will empower investors to access real-time information regarding their actual bank deposits when applying for initial public offerings (IPOs), according to Suresh Neupane, spokesperson for CDS and Clearing. Neupane further explained that the frontline regulator will roll out the system following discussions at its board meeting.

Under the current system, investors applying for newly issued primary shares are left in suspense regarding the approval of their subscriptions. However, with the introduction of this new provision, applications lacking sufficient bank balances will be automatically canceled.

Up until now, the banks involved have taken approximately one week to verify the bank account balances of applicants.

Exploiting this time gap in the system, some applicants with insufficient funds have managed to apply for IPOs. Notably, there have been instances of fraudulent transactions, such as the case involving Ghorahi Cement’s IPOs a few months ago.

Sebon’s new system will also enable payment service providers to furnish real-time transaction details concerning their clients applying for IPOs.

This advancement aims to enhance transparency and security within the IPO subscription process, ultimately benefiting investors and ensuring a more robust market environment.