Understanding share trading may not be everyone’s cup of tea. However, in recent years, share market of Nepal has grown in terms of interest and participation. For those who are not familiar with intricacies of this evolving market, this article provides an understanding of the basics. Firstly, Nepal Stock Exchange (NEPSE) is the only authorized exchange facilitating secondary market operations in Nepal. There have been hardline efforts to establish a privately-owned stock exchange since the existing one is government-owned and lags behind in many aspects.
Overview
NEPSE was established on 13 January 1994 operating under Securities Act, 2007. It is regulated by Securities Board of Nepal (SEBON), an apex body who oversees and supervises the daily operations of Nepali share market. Approximately, 280 companies are listed in NEPSE. Only domestic registered companies are allowed to register. International investment companies and foreign individual investors are legally not permitted to buy and sell securities listed in NEPSE. The ‘Boutique Nature of Nepal’s Economy’ is reflected via the platform, an orthodox one.
Out of the current 280 listed companies, 68% of the securities are Banking and Financial Institutions (popularly known as BFIs). These companies are regulated and monitored by Nepal Rastra Bank, another apex body. Other sectors highly trending on the stock exchange are Hotels and Tourism, Hydropower, Investment, Insurance, Manufacturing and Mutual Funds.
Impact of COVID
When COVID-19 hit the global economy, the stock market held a prominent space in the domestic economy. Just like any other sectors, beginning of pandemic was a challenging situation for the capital markets. However, within few months, Nepal Stock Exchange was on track to introduce a fully integrated online platform. The pandemic gave rise to numerous online systems and significantly fast-tracked the adoption of digital technology in the financial markets. Likewise, more people entered the stock market eco-system and began exploring their investing acumen.
How to Register?
For beginners, you need to follow these steps. To register for your trading account, you will require 3-4 days. This is a one-time set-up process. You will first need to open a Demat Account along with the TMS (Trade Management System) Account. According to SEBON, there are 88 listed stock brokers who will facilitate your trading among other functions. You can select any one broker from the list based on your criteria.
You will need to link the demat account with your bank account by filling in the C-ASBA form in your respective bank. Also open up a ‘Connect IPS’ account and link the bank to stay integrated. Open Connect IPS app or website and fill in your details. When your profile is created, just ‘link a bank account’. However, you can add as many accounts as you have and use all of them. Using ‘Connect IPS’ is the safest online route as it is facilitated directly for Nepal Clearing System under the regulation of Nepal Rastra Bank. Lastly, reset the passwords of Mero Share Account and TMS Online. Remember all the login details along with CRN Number provided when you filled up your C-ASBA form. And you are good to go.
Stay tuned for future columns on other aspects of share trading in Nepal.
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