Kathmandu, Aug 11
Nepal Stock Exchange Limited (NEPSE) has issued procedures
for the operation of stock dealer.
The Stock dealer Operation Procedure, 2020 will come into
effect from coming Monday, August 17, as the Board of Directors of the NEPSE
decided.
A stock dealer is the business entity that buys and sells the
securities in the share market on its own account. It is different from the
share broker as it buys and sells the shares on behalf of the investors while
the dealer business is to conduct it as a part of its business.
It helps to stabilise the share market and maintain the
liquidity by buying the securities while the price goes unexpectedly down and
selling at the time of market inflation.
NEPSE has barred the stock dealer to involve in the
transaction of smaller companies listed. It will create a list of the companies
for the dealer to transact, and the list will be updated every year.
The dealer can select the company to buy the securities if
the latter is in profit for the past three years, has at least 10,000 investors
and more than Rs. 200 million paid up capital, and has share transaction at
least 80 per cent days of the business days.
It has to select the companies that it wants to buy the
shares of and can transact the securities with the approval of the NEPSE.
The procedure has set the minimum limit of securities that a
dealer can transact at 1000 units. It can buy or sell 10,000 to 50,000 units of
shares as per the paid-up capital of the company. Fifty thousand units of
shares of a company that has Rs. 8 billion or more paid up capital can be
bought.
Likewise, the dealer can buy 40,000 units of shares of a
company having paid up capital Rs. 5 billion to Rs. 8 billion, 30,000 units of
a company with Rs. 2 billion to Rs. 5 billion paid up capital.
About 25,000 and 20,000 units of shares could be bought of
the companies having paid up capital of Rs. 1 billion to Rs. 2 billion, and Rs.
500 million to Rs. 1 billion respectively.
Only 10,000 units of shares can be bought of the company that
has paid up capital from Rs. 200 million to Rs. 500 million.
A dealer cannot buy or sell shares that amount more than 60
per cent of its net worth in a day. It has to maintain a bank or cash guarantee
of Rs. 5 million at the NEPSE before starting to work as a dealer.
Citizen Investment Trust has already announced that it would
begin to work as a stock dealer from the next Nepali month of Bhadra. NEPSE has
formulated the procedures to regulate the stock dealers with a hope that more
companies will join the CIT's initiation.
Published in The Rising Nepal daily on 12 August 2020.
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