Introduction
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Nepal Stock Exchange, in short NEPSE, is established under the
company act, operating under Securities Exchange Act, 1983.
The basic objective of NEPSE is to impart free marketability and liquidity to the government and corporate securities by facilitating transactions in its trading floor through member, market intermediaries, such as broker, market makers etc. NEPSE opened its trading floor on 13th January 1994.
Government of Nepal, Nepal Rastra Bank, Nepal Industrial Development corporation and members are the shareholders of NEPSE.
History
The history of securities market began with the floatation of shares by Biratnagar Jute Mills Ltd. and Nepal Bank Ltd. in 1937. Introduction of the Company Act in 1964, the first issuance of Government Bond in 1964 and the establishment of Securities Exchange Center Ltd. in 1976 were other significant development relating to capital markets.
Securities Exchange Center was established with an objective of facilitating and promoting the growth of capital markets. Before conversion into stock exchange it was the only capital markets institution undertaking the job of brokering, underwriting, managing public issue, market making for government bonds and other financial services. Nepal Government, under a program initiated to reform capital markets converted Securities Exchange Center into Nepal Stock Exchange in 1993.
Members
Members of NEPSE are permitted to act as intermediaries in buying and selling of government bonds and listed corporate securities. At present, there are 23 member brokers and 2 market makers, who operate on the trading floor as per the Securities Exchange Act, 1983, rules and bye-laws.
Besides this, NEPSE has also granted membership to issue and sales manager securities trader (Dealer). Issue and sales manager works as manager to the issue and underwriter for public issue of securities whereas securities trader (Dealer) works as individual portfolio manager.
At present there are 11 sales and issue manager and 2 dealers (Secondary market). Click here to get information of NEPSE members.
The tenure of the membership is one year. The license should be renewed within 3 months after the closure of the fiscal year. If not, it can be done within another three months by paying 25% penalty.
The basic objective of NEPSE is to impart free marketability and liquidity to the government and corporate securities by facilitating transactions in its trading floor through member, market intermediaries, such as broker, market makers etc. NEPSE opened its trading floor on 13th January 1994.
Government of Nepal, Nepal Rastra Bank, Nepal Industrial Development corporation and members are the shareholders of NEPSE.
History
The history of securities market began with the floatation of shares by Biratnagar Jute Mills Ltd. and Nepal Bank Ltd. in 1937. Introduction of the Company Act in 1964, the first issuance of Government Bond in 1964 and the establishment of Securities Exchange Center Ltd. in 1976 were other significant development relating to capital markets.
Securities Exchange Center was established with an objective of facilitating and promoting the growth of capital markets. Before conversion into stock exchange it was the only capital markets institution undertaking the job of brokering, underwriting, managing public issue, market making for government bonds and other financial services. Nepal Government, under a program initiated to reform capital markets converted Securities Exchange Center into Nepal Stock Exchange in 1993.
Members
Members of NEPSE are permitted to act as intermediaries in buying and selling of government bonds and listed corporate securities. At present, there are 23 member brokers and 2 market makers, who operate on the trading floor as per the Securities Exchange Act, 1983, rules and bye-laws.
Besides this, NEPSE has also granted membership to issue and sales manager securities trader (Dealer). Issue and sales manager works as manager to the issue and underwriter for public issue of securities whereas securities trader (Dealer) works as individual portfolio manager.
At present there are 11 sales and issue manager and 2 dealers (Secondary market). Click here to get information of NEPSE members.
The tenure of the membership is one year. The license should be renewed within 3 months after the closure of the fiscal year. If not, it can be done within another three months by paying 25% penalty.
Trading
NEPSE the only Stock Exchange in Nepal introduced fully
automated screen based trading since 24th August, 2007.
The NEPSE trading system is called ‘NEPSE Automated Trading
System ‘(NATS) is a fully automated screen based trading system, which adopts
the principle of an order driven market.
Market Timings
Trading on equities takes place on all days of week (except
Saturdays and holidays declared by exchange in advance). On Friday only odd lot
trading is done.
The market timings of the equities are:-
Market Open: - 12:00 Hours
Market Close: - 15:00 Hours
Market Close: - 15:00 Hours
Odd Lot Trading is done on Fridays. For Odd Lot Trading Market
Timings are
Market Open: - 12:00 Hours
Market Close: - 13:00 Hours
Market Close: - 13:00 Hours
Note:- The exchange may however close the market on days other
than schedule holidays or may open the market on days originally declared as
holidays. The exchange may also extend, advance or reduce trading hours when it
deems fit necessary.
Securities Available for Trading
NEPSE facilitates trading in the following instruments
A. Shares
• Equity Shares
• Preference Shares
B. Debentures
C. Government Bonds
D. Mutual Funds
• Equity Shares
• Preference Shares
B. Debentures
C. Government Bonds
D. Mutual Funds
Circuit Breakers
NEPSE has implemented index-based circuit breakers with effect
from 2064/6/4 (21 September 2007). In addition to the circuit breakers, price
range is also applicable on individual securities.
Index-based Circuit Breakers
The index-based circuit breaker system applies at 3 stages of
the NEPSE index movement of 3%, 4% and 5%, . These circuit breakers when
triggered bring about a trading halt in all equity.
• In case of 3% movement either way, there would be a market
halt for 15 minutes if the movement takes place during first hour of trading
i.e. 13:00 hours. In case this movement takes after 13:00 hours there will be
no trading halt at this level and market shall continue trading.
• In case of 4% movement either way, there would be a market halt for half an hour if the movement takes place before 14:00 hours. In case this movement takes after 14:00 hours there will be no trading halt at this level and market shall continue trading.
• In case of 5% movement in either way, trading shall be halted for the remainder of the day.
Price Range
Price Range is applicable on individual securities. The trading
of the individual securities are not halted but allowed to trade within the
price range.
• The price band is 10% of previous close on either way. *
* During the ATO session the range is 5% on either way of
Previous Close Price. After the band is 2% on either way of the Last traded
price till it reaches to 10% of the previous close.
Trading Location
The trading can be done either from NEPSE’s trading floor or
from the broker’s office. NEPSE uses sophisticated technology through brokers
can trade remotely from their office located inside the Kathmandu valley. This
remote trading facility was started from 1 November 2007.
Trading System
NEPSE operates on the ‘NEPSE Automated Trading System ‘(NATS), a
fully screen based automated trading system, which adopts the principle of an
order driven market.
Order Matching Rules
The system adopts principle of order driven market. The best buy
order is matched with the best sell order. An order may match partially with
another order producing multiple trades. For order matching the best buy order
is the one with the highest price and the best sell order is the one with the
lowest price. This is because the system views all buy orders available from
the point of view of the sellers and all sell orders from the point of view of
the buyers in the market. So, of all buy orders available in the market at any
point of time, a seller would obviously like to sell at the highest possible
buy price that is offered. Hence, the best buy order is the order with the
highest price and the best sell order is the order with the lowest price.
Settlement
NEPSE has adopted a T+3 settlement system. Settlement will be
carried out on the basis of paper verses payment. The trading is done at
"T" and at T+1; the buying brokers have to submit bank vouchers for
settlement with covering letter. At T+2, the selling brokers must submit share
certificate with covering letter. At T+3, NEPSE prepares billing for payment
and this will be forwarded to the bank.
Once the settlement is done the buying brokers with the consultation of the clients must decide and present the purchased shares if they want to record it as blank transfer. This must be completed within T+5.
Once the settlement is done the buying brokers with the consultation of the clients must decide and present the purchased shares if they want to record it as blank transfer. This must be completed within T+5.
Blank Transfer
Under this mechanism an opportunities to derive the market
benefit is provided. But presently, the buying brokers must complete the BT
process within T+5. The transactions that are executed can be recorded in
different way and NEPSE has considered all possible retention. The followings
are the major key points to be considered.
1. This is related only with buy of the securities.
2. The buyer may decide to have market benefit either to have capital gains or to minimize the loss.
3. In order to do this s/he may partly send for name transfer or may register it in blank transfer.
4. If s/he register total purchase in blank transfer and can put for sale and if only the part of the shares are subscribed then s/he can handover the part and the part can be forwarded for name transfer to the concerned company. In order to do this s/he has to cancel the blank transfer for that portion.
1. This is related only with buy of the securities.
2. The buyer may decide to have market benefit either to have capital gains or to minimize the loss.
3. In order to do this s/he may partly send for name transfer or may register it in blank transfer.
4. If s/he register total purchase in blank transfer and can put for sale and if only the part of the shares are subscribed then s/he can handover the part and the part can be forwarded for name transfer to the concerned company. In order to do this s/he has to cancel the blank transfer for that portion.
Brokerage
1. Brokerage for equity
S.No.
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Trading Amount
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Brokerage %
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A
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Up to 50,000
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1
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B
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> 50,000 &
< 5,00,000
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0.9
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C
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> 5,00,000 &
< 10,00,000
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0.8
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D
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> 10,00,000
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0.7
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2. Brokerage for Government Bond
S.No.
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Trading Amount
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Brokerage %
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A
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Up to 5,00,000
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0.20
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B
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> 5,00,000 &
< 50,00,000
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0.10
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C
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> 50,00,000
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0.05
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3. Brokerage for all other stocks which is not listed in 1 and
2.
S.No.
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Trading Amount
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Brokerage %
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A
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Up to 50,000
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0.75
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B
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> 50,000 &
< 50,00,000
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0.60
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C
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> 50,00,000
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0.40
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