Margin Lending Thru Brokers; Long Await For Investors

Jul 11, 2019 10:22 AM Merolagani

After a long stretch, Nepal Stock Exchange (NEPSE) finally approved eight broker companies to initiate margin lending on June 27. Despite the achievement, investors are still unable to use the service due to lack of set mechanism.

In order to implement margin lending through broker companies, investors are required to open a margin account in broker companies. The margin account then will be integrated to the CDSC system.

According to Suresh Neupane, spokesperson of CDSC, it formulated a separate task procedure for the operation of margin account which has been sent to Securities Board of Nepal (SEBON) for approval.

However, SEBON has not approved the task procedure yet which has halted the initiation of margin trading. Given the approval by SEBON, CSDC is technically and policy-wise ready to operate margin lending said Neupane.

In the meantime, Niraj Giri, Spokesperson of SEBON informed that the task procedure is in the discussion phase. A decision regarding the task procedure will be taken soon, he added.

Moreover, the process might get delayed through brokers also. As per Santosh Mainali, director of Secured Securities, brokers are still trailing backup system for margin trading. Upon the successful trial of the system, the brokers can soon start the margin trading, he said.

Previously on June 27, NEPSE allowed margin lending to Crystal Kanchanjunga Securities, Vision Securities, Shree Krishna Securities, Nepal Stock House, Primo Securities, Secured Securities, Deepshikha Securities and Kohinoor Securities. Additional 11 brokerage companies have sought approval for the same which will be approved after fulfilling the due procedure.

Although investors are getting the opportunity after a long struggle, they will not be able to use the services on all listed companies. Merely, 29 listed companies have been eligible for the margin trading.

 


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