To attract new investors to the capital market, Nepal Stock Exchange
(Nepse) is moving forward with the plan to introduce online trading
system and new investment instruments.“Once Nepse becomes compatible for online trading, then only will it be accessible to people from small towns outside the valley and can the presence of foreign investors and Non-Resident Nepalis be expected,” pointed out finance minister Shankar Koirala during a visit to Nepse today.
“Nepse is capable of getting a fully automated system on its own and does not require a strategic partner from outside,” according to the finance minister.
“However, the Finance Ministry is committed to moving Nepse forward towards privatisation as government entities divest their stakes gradually from the company,” he added.
He mentioned that the capital market was not only a reflection of an economy but also the measure of confidence of public and business communities in the country. “Current political developments and timely budget should have pushed the index further up from the current 540 points,” he said, adding that a plunge in the share market also worries the Finance Ministry.
General manager of Nepse Sitaram Thapaliya informed that Nepse has prepared the Terms of Reference to hire a consultant for the new system. “We first have to decide whether the system needs upgradation or replacement. Before the end of the fiscal year, steps will be in place for the automated system,” he said.
The new trading system will not only allow remote based trading but will also have broker back office system, advanced surveillance system and risk management modules as in major trading systems globally.
He also emphasised on the need for upgrading bylaws and regulations to make the laws governing trading and stock exchange compatible with current times and needs, and also with the Securities Act and other financial market laws.
“Moreover, there is also a need to promote other instruments for trading such as bonds. We will also develop derivatives and other similar advanced index based trading instruments for investors,” he said.
Senior economic adviser to the finance ministry Dr Chiranjibi Nepal expressed that Nepse needed to do more to attract new investors. “The archaic set-up of the stock exchange will not bring more investors. The annual turnover of Nepse is equivalent to less than 30 per cent of the total Rs 1.7 trillion, which is not an encouraging sign while there are almost 230 listed companies,” said Nepal who had also served as chairman of Securities Board of Nepal — capital market regulator — a few years back.
Trading system has to be sturdy without any glitches then only will foreign institutional investors enter the stock market, he said, emphasising that no investor wants to invest in a market that does not guarantee security of investments.
“It is a shame that the central depository system is still not fully operational even after two years of its establishment,” he said.
Source: THT
