Nepal's stock market has rampant exercise of
insider trading, this is an issue most of the common investors have been
complaining about since long. Insider trading is understood as an illegal act
as it means the trading of the public commercial institutions securities by
individuals with access to the information about the company which general
public do not have the luxury.
In some instances, the individuals having access
to information do not buy the stock themselves rather provide such information
to other investors, sometimes for some benefits. General investors are being
cheated long due to insider trading.
Although the Securities Board of Nepal (SEBON) has been repeatedly saying that it was trying to discourage the illegal act, the practice has seen no declining. In its Policy and Programmes for the Fiscal Year 2-18/19, announced on Monday, SEBON again said that it was committed to discourage insider trading to make the securities transaction in the secondary market more trust worthy, and that it would implement a separate Insider Trading Discouragement Bylaws soon.
But, rather than announcing the same policy multiple times, the capital market regulator in the country should implement new digital technology in order to track the 'insider trading'. The securities markets in the developed countries use a tracking system which records all the information about the staff of the listed companies and investors as well as securities brokers, and the transactions are flagged if they were done by the close relatives of the company staff.
Published in The Rising Nepal daily on 11 July 2018.
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