Using Grammatical Signals Suitable to Patterns of Idea Development
Security market of nepal
1. PRESENTATION ON
SECURITIES MARKET MECHANISM IN NEPAL
TEAM MEMBERS:
PAWAN KAWAN
BIKASH SAPKOTA
SANGITA ADHIKARI
RANJITA SAPKOTA
SUNITA BARNAWAL
2. Security Market: Background
Securities: Negotiable instrument representing financial value
Security Market: Mechanism where securities are traded
Types of security market
I. Primary Market
II. Secondary Market
Quote Driven Market
Order Driven Market
Historical Background:
In 1602 the Dutch east India Company issued the first share
on the Amsterdam stock exchange
India was the first country to start trading of securities in Asia
3. Major Securities Market
New York Stock Exchange
London Stock Exchange
Established in 1817
By 2010 in 1801
Foundedthere are 2317 companies listed
Bombay Stock Exchange
It has December 2010, the of US$ 13.39 trillion on Dec 2010
As of total market capture Exchange had a market capitalization of
Established in 1875
World largestexchange in Asia
US$3.6 trillion stock exchange
Oldest stock
Fourth largest stock exchangeAutomated Trading System (ATS)
In 1999, the BSE installed the in the world (and the largest in
Europe) market capitalization of listed companies is US$ 1.28
The total
trillion as of Feb 2010
4. Security Market In Nepal
Background of securities market
Flotation of shares by Biratnagar Jute Mills Ltd. and Nepal Bank
Ltd. in 1937
Introduction of the Company Act in 1964,
the first issuance of Government Bond in 1964 and
the establishment of Securities Exchange Center Ltd. in 1976
Converted Securities Exchange Center into Nepal Stock
Exchange in 1993
Order driven market
SEBON
5. Primary Market In Nepal
Investment Banker In Nepal
Investment banker is known as Merchant Banker
Financial professional who helps companies and government
organizations in acquiring capital
Merchant Banker involves sale of security to the public
6. Merchant Bankers in Nepal
S. N. Merchant Bankers
1. NSM Merchant Banking Ltd.
2. NCM Merchant Banking Ltd.
3. Investment Management Merchant Banker Ltd.
4. Growmore Merchant Banker Ltd.
5. Citizen Investment Trust
6. NABIL Investment Banking Ltd.
7. Vibor Capital Ltd.
8. Civil Capital Market Ltd.
9. Ace Capital Ltd.
10. Beed Invest Ltd.
11. NMB Capital Ltd.
12. Elite Capital Ltd.
13. Laxmi Capital Market Ltd.
14. Araniko Capital Management Company Ltd.
7. Securities Issue Process In Nepal
1. Company Decision
2. Appointment of Issue Manager
3. Prospectus Preparation
4. Filling with the company’s information about
Includes SEBON
5. SEBON’s review by the Prospectus Vetting Committee
capital,
financial
of SEBON situation,
There are member representing
management,
6. Clarification/Update
SEBON, promoters & directors, and
involving
7. Prospectus Approval by SEBON
Nepal Rastra Bank,
Stock exchange,
future prospectus
Insurance Board and
company registrar’s Office
8. Securities Issue Process In Nepal(contd…)
8. Issue Open and Issue Close
Issue should open within 2
9. Allotment andshould bemonths of prospectus approval
Announcements
Refundingpublished at least 7 days before
the issue open.
Number of applications Time for refund
. Applications shall be accepted for a minimum period of five
and maximum of 15 working days from the date of opening
Up to 100,000 40 days
100,001 to 200,000 50 days
200,001 to 300,000 60 days
300,001 and above 70 days
9. Secondary Market In Nepal
Nepal Stock Exchange
Located at Singha Durbar Plaza, Kathmandu, Nepal
Opened its trading floor 13 January, 1994
Government of Nepal, Nepal Rastra Bank, Nepal
Industrial Development corporation and members are the
shareholders of NEPSE
204 listed companies at present
10. Listed Companies In NEPSE
2
21
Bank and finance
4
4 Hotel
18 Manufacturing and
processing
Hydro power
4
Trading
Insurance
151
Others
11. Trading System of Nepal Stock Exchange
Open cry out system
Buyer A Seller C
SELLER
BUYER Broker
Broker
Transaction
hall of NEPSE
12. Automated trading mechanism
Introduced fully automated screen based trading since 24th
August, 2007
The NEPSE trading system is called ‘NEPSE Automated
Trading System ‘(NATS)
Adopts the principle of an order driven market
Aided by Asian Development Bank
13. Major features of Automated Trading Mechanism
Client Management
Order
Price
Execute at
Retain until
Condition
Market Depth
Settlement
Blank Transfer
Ownership transfer
Circuit Breaker
14. Trading Days and Hours
Types of trading Days Trading time
Government security trading Sunday to Thursday 11 AM. to 12
Regular trading Sunday to Thursday 12 A.M. to 3 P.M.
Odd Lot Trading Friday 11 A.M. to 12 Noon
15. Brokerage Commission
Brokerage Commission for equity:
S. No. Trading Amount Brokerage%
A Up to 50,000 1
B >50,000 & <5,00,000 0.9
C >5,00,000 & <10,00,000 0.8
D >10,00,000 0.7
Brokerage commission for Government Bond:
S. No. Trading Amount Brokerage %
A Up to 5,00,000 0.20
B >5,00,000 & <50,00,000 0.10
C >50,00,000 0.5
16. Brokerage Commission(Contd…)
Brokerage commission for all other stocks except
equity and government bonds:
S. No. Trading Amount Brokerage %
A Up to 50,000 0.75
B >50,000 & <50,00,000 0.60
C >50,00,000 0.40
17. RECENT REFORM IN NEPSE
Secondary trading of government Bond Started
OTC market
Trading of Promoters’ shares
Establishment of Central Depository System
Sensitive Index and float Index Introduced
Trading from out of kathmandu valley
Recommendation to add new brokers
Real time information dissemination and online trading
18. Comparison of Nepalese security market with South Asian and Global context:
Basis NewYork Stock South Asian Nepalese
Exchange Security Market ( Security Market
Reffering BSE )
Initiation Around 17th Around 200years Late start around
century ago from British in 1937
Regime
Size(on the basis of Huge market Medium Small
market coverage)
Efficiency Highly efficient adopting the Is in infant stage of
market efficiency adopting efficiency .
Regulatory System The U.S Securities SEBI, SEC etc. SEBON
and Exchange
Commission(S.E.C)
Automated Trading All the trading is Has ATS in almost all Nepalese security
system based in Automated South Asian countries market is also based
trading system. on ATS and screen
based trading.
19. Contd…
.
Technology Highly Has a good Slow
adaptation sophisticated technology adaptation of
technology base technology
Participation All types of Dominated by Commercial
organization banking sectors banks
participation is
vast
Settlement Follows T+1 and Follow T+2 rolling Follows T+3
procedure real time trade settlement rolling settlement
settlement procedure procedure
process
20. Factors affecting the stock market
Foreign direct Investment
Inflation And Deflation
Foreign Markets
Globalization
Earnings and Emotions (2E’s)
21. Shortcomings of Nepalese security market
Lack of experts
Lack of credit rating agency
Lack of institutional investors participation in transaction
Restrictions for Foreign Direct Investment
Foreign securities are restricted in NEPSE
22. Conclusions:
Conclusions
Order driven security market
Bank based security market
Open Cry out system has been replaced by automated
trading system
Lack of proper regulatory system and credit rating
agency
Value weighted index
Lack of public awareness towards security and its
trading