August 11, 2020 | Investopaper
The way has been opened for the much awaited stock dealer to come into operation in the market. The Nepal Stock Exchange (NEPSE) on Monday released the working procedure in this regard. Institutions including Citizen Investment Trust (CIT), which is currently being discussed as stock dealer, are preparing to start investing in the market from Bhadra.
Directive In Working Procedure
The procedure issued by Nepse on Monday has directed that such dealers cannot invest in companies with less than Rs 20 crores in capital. Due to this provision, stock dealers cannot invest in 18 out of 53 microfinance companies currently listed in the market.
Similarly, those working as stock dealers will have to keep at least Rs 50 lakh in cash or bank guarantee in Nepse. They will be able to trade up to 25 times of the guaranteed amount. Such amount can also be used for reconciliation after the transaction. Such companies will be allowed to trade up to a maximum of 4 times their net worth.
Similarly, these companies have been given the facility to buy and sell a maximum of 10,000 to 50,000 shares at a time. No less than one thousand shares can be traded at a time.
Only stock dealers will be able to buy and sell shares of a company that has been in profit for three years, has at least 10,000 investors and has a paid-up capital of more than Rs 20 crores. The company to be traded in this way should have at least 80 percent turnover in a year.
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Nagarik Stock Dealer Company
The company, which is about to come into operation as Nagarik Stock Dealer Company Limited, has so far been invested by Citizen Investment Trust, Reinsurance Company and Nepal Telecom.
Nagarik stock dealer company, at current, has a paid-up capital of Rs 3.5 billion. Citizen Investment Fund has 51 per cent share in the company. Likewise, Reinsurance Company and Nepal Telecom will invest 10 per cent and 9 per cent respectively. The stock dealer company will issue the shares worth Rs 1.5 billion to the general public.
The company is preparing to set up another fund as soon as it comes into operation. The citizen stock dealer company has made a separate strategy of investing Rs 5 billion in the market. For this, the company aims to raise capital institutionally.
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