There is an immediate need to replace or upgrade the prevalent trading system, but it cannot be done overnight. Nepse, being a public enterprise, has its limitations.
DIKSHYA SINGH
Last week, the country’s only stock exchange — Nepal Stock Exchange — celebrated its 20 years of operation. Despite completing two decades, the trading system and instruments have seen little change, except for the semi-automated trading portal replacing the open outcry system. Stock traders still have to scuffle with brokers with physical certificates, there are frequent interruptions in trading due to technical hitches, and Nepse’s website being too slow has created hassles for investors. Dikshya Singh of The Himalayan Times caught up with Nepse’s CEO and General Manager Sitaram Thapaliya to discuss the ongoing trading system upgradation, stock exchange’s privatisation, and full automation of trading, among others. Excerpts:
Nepse has completed two decades, yet stakeholders complain that not much has changed — starting from infrastructure to the players who are dominating the market. Is it true?
It would be unfair to say that things have not changed at all. There could be some active investors who have been involved in stock trading since the beginning of Nepse. However, in the current situation, with the daily turnover exceeding Rs 200 million, a single player or even a group is not capable of dominating or manipulating the market movement at their whim. As for technological changes, trading can be undertaken from brokers’ offices and does not require them to be physically present here. Of late, we have even tweaked the system and the order execution has become quite fast. Likewise, we are working on shifting our web server host — Ministry of Home Affairs’ GIDC — from Canada. And we are also working on system upgradation.
Nepse has been stating the need to upgrade the trading system for quite some time, but nothing tangible has happened. Can we expect the existing system to be replaced soon with a better, faster and advanced trading system according to the needs of the market?
There is an immediate need to replace or upgrade the prevalent trading system, but it cannot be done overnight. Nepse, being a public enterprise, has its limitations. Nepse cannot grant contracts to software companies on its own. We have to follow the public procurement system regulations and procedures. However, Nepse will soon publish an Expression of Interest seeking a consultant who will do the study on whether the trading system requires total replacement or upgradation will suffice. After the consultant’s report, we will announce a global tender for the required system. So, we can expect a new trading system by the end of next fiscal year. If Nepse were a private company, we could be halfway done in preparing a new system in six months.
Does this mean that traders and brokers will be facing technical snags as the number of traders go up?
The recent technical problems that disrupted trading were due to disconnection of optical fibre. During that time, we were able to identify the problem and sorted it out quite swiftly. So at present, Nepse is trying its best and has been successful in resolving most of the problems in coordination with vendors. In addition, once we transfer web hosting to Kathmandu, the problems with the website will be over. However, I repeat, a major transformation will require time.
Technical transformation may take a long time, but there are many factors bugging the market right now, such as insider trading and a few traders manipulating prices. Can that not be handled right now?
There is a huge gap in information dissemination right now. Keeping that in mind, we have asked the listed companies to provide Nepse any price sensitive decisions, such as of dividends they make. We have also asked them to take such decisions before 3:00pm, which is when the market closes. We have noticed that between the period when information is publicised, some investors are able to take advantage due to insider tips. We are hopeful that companies will also realise that such insidious acts will harm the market. Nepse index manipulation by tweaking a few scrips at the end of the trading is also prevalent. We insist the investors check the float index that shows the exact price movement of the stocks that were traded on the particular day.
Nepse’s subsidiary — CDS and Clearing Ltd (CDSC) — was inaugurated in July 2012, but it still has not started its actual operation of clearing and settlement of shares. Why is it so?
It has been only a week since I took place at CDSC’s board, though I was appointed Nepse’s GM in July 2013. So, I am not aware of exactly what it is that is impeding CDSC’s operation. However, there is no denying that CDSC’s operation needs to be started as soon as possible. Brokers have remote work stations outside the Valley for trading, but investors outside the capital have to come here for share certificate issuance and signature verification. Once CDSC starts its operation, investors will not have to run around with share certificates and it will help improve the depth of the market.
source:DIKSHYA SINGH(2014),"'We can expect a new trading system by the end of next fiscal' , The himalayan times,18 jan 2014
LINK
DIKSHYA SINGH
Last week, the country’s only stock exchange — Nepal Stock Exchange — celebrated its 20 years of operation. Despite completing two decades, the trading system and instruments have seen little change, except for the semi-automated trading portal replacing the open outcry system. Stock traders still have to scuffle with brokers with physical certificates, there are frequent interruptions in trading due to technical hitches, and Nepse’s website being too slow has created hassles for investors. Dikshya Singh of The Himalayan Times caught up with Nepse’s CEO and General Manager Sitaram Thapaliya to discuss the ongoing trading system upgradation, stock exchange’s privatisation, and full automation of trading, among others. Excerpts:
Nepse has completed two decades, yet stakeholders complain that not much has changed — starting from infrastructure to the players who are dominating the market. Is it true?
It would be unfair to say that things have not changed at all. There could be some active investors who have been involved in stock trading since the beginning of Nepse. However, in the current situation, with the daily turnover exceeding Rs 200 million, a single player or even a group is not capable of dominating or manipulating the market movement at their whim. As for technological changes, trading can be undertaken from brokers’ offices and does not require them to be physically present here. Of late, we have even tweaked the system and the order execution has become quite fast. Likewise, we are working on shifting our web server host — Ministry of Home Affairs’ GIDC — from Canada. And we are also working on system upgradation.
Nepse has been stating the need to upgrade the trading system for quite some time, but nothing tangible has happened. Can we expect the existing system to be replaced soon with a better, faster and advanced trading system according to the needs of the market?
There is an immediate need to replace or upgrade the prevalent trading system, but it cannot be done overnight. Nepse, being a public enterprise, has its limitations. Nepse cannot grant contracts to software companies on its own. We have to follow the public procurement system regulations and procedures. However, Nepse will soon publish an Expression of Interest seeking a consultant who will do the study on whether the trading system requires total replacement or upgradation will suffice. After the consultant’s report, we will announce a global tender for the required system. So, we can expect a new trading system by the end of next fiscal year. If Nepse were a private company, we could be halfway done in preparing a new system in six months.
Does this mean that traders and brokers will be facing technical snags as the number of traders go up?
The recent technical problems that disrupted trading were due to disconnection of optical fibre. During that time, we were able to identify the problem and sorted it out quite swiftly. So at present, Nepse is trying its best and has been successful in resolving most of the problems in coordination with vendors. In addition, once we transfer web hosting to Kathmandu, the problems with the website will be over. However, I repeat, a major transformation will require time.
Technical transformation may take a long time, but there are many factors bugging the market right now, such as insider trading and a few traders manipulating prices. Can that not be handled right now?
There is a huge gap in information dissemination right now. Keeping that in mind, we have asked the listed companies to provide Nepse any price sensitive decisions, such as of dividends they make. We have also asked them to take such decisions before 3:00pm, which is when the market closes. We have noticed that between the period when information is publicised, some investors are able to take advantage due to insider tips. We are hopeful that companies will also realise that such insidious acts will harm the market. Nepse index manipulation by tweaking a few scrips at the end of the trading is also prevalent. We insist the investors check the float index that shows the exact price movement of the stocks that were traded on the particular day.
Nepse’s subsidiary — CDS and Clearing Ltd (CDSC) — was inaugurated in July 2012, but it still has not started its actual operation of clearing and settlement of shares. Why is it so?
It has been only a week since I took place at CDSC’s board, though I was appointed Nepse’s GM in July 2013. So, I am not aware of exactly what it is that is impeding CDSC’s operation. However, there is no denying that CDSC’s operation needs to be started as soon as possible. Brokers have remote work stations outside the Valley for trading, but investors outside the capital have to come here for share certificate issuance and signature verification. Once CDSC starts its operation, investors will not have to run around with share certificates and it will help improve the depth of the market.
source:DIKSHYA SINGH(2014),"'We can expect a new trading system by the end of next fiscal' , The himalayan times,18 jan 2014
LINK
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