CDSC to launch central KYC soon

Panauti, Feb. 25

The CDS and Clearing (CDSC) Limited is making preparations to implement the central KYC (know your customer) to reduce the hurdles faced by the customers and investors in the capital market.

"Investors are facing trouble as they have to fill KYC in many places which also demands more expenses to manage it. Therefore, the CDSC is planning to launch a system where customers will fill the KYC in one of the agencies and others will draw the details from the same data," Purna Prasad Acharya, Chief Executive Officer of the company, said in a training programme for financial journalists in Panauti of Kavre district.

The company is set to implement the new provision after getting approval from the Securities Board of Nepal (SEBON), the capital market regulator.

Likewise, Acharya said that the CDSC is also waiting for the approval from the SEBON to operate auction system in the stock market. It has submitted the working procedures for the operation of the market where buyers and sellers make competitive bids – they propose the buying and selling price respectively.

Although the securities related to the auction market procedure were submitted to the board sometimes ago, the approval is pending.

CDSC functions as a central depositary for instruments like equity, bonds and warrants in dematerialized form. It has the responsibility to safekeeping deposit, and withdrawal of securities certificates and transfer of ownership or their rights.

Likewise, CEO of Nepal Stock Exchange (NEPSE) Limited, Krishna Bahadur Karki, said that the global economic slowdown caused by the Russia-Ukraine war had affected the Nepali economy and stock market as well.

According to him, concerns are growing about the deteriorating indices of the stock market but it is directly linked to the national and international economic activities. He urged the media to transmit information but not to sell the sentiment about the market.

President of Stock Brokers Association of Nepal (SBAN), Dharmaraj Sapkota, said that even though there is no settlement guarantee fund, the broker companies are making payments to investors on time.

"Even though there was a share transaction of up to Rs. 22 billion in a day, the broker companies easily cleared the stock on time. However, now there are various objections that the broker companies are delaying the payments," he said.

He maintained that the brokers have not delayed the payment, even though there is no settlement guarantee fund.

There is a history of some broker companies abroad running away without clearing. However, till date, there is no instance of brokers not clearing the transactions in Nepal with the exceptions of some technical glitches, said Sapkota.

The training was organised by Nepal Association of Financial Journalists (NAFIJ) with the support from NEPSE, CDSC and SBAN. Deputy Manager of CDSC, Yograj Joshi, Manager of NEPSE, Niranjan Phuyal, Vice President of SBAN, Sarita Parajuli, and Deputy Manager of NEPSE, Murahari Parajuli, facilitated the training that ran for two days. 

Published in The Rising Nepal daily on 26 February 2023.