Nepal Stock Exchange (Nepse) has started taking strong action against brokerage firms who fail to complete cash settlement in time.
On Sunday, Nepse suspended four brokerage firms -- Arun Securities, Primo Securities, Midas Stock Broking and Swornalaxmi Securities -- from trading. As a result, these firms could not trade securities on the first trading day of the week.
A total of 16 brokerage firms were barred from the trading on the first trading day (July 27) of last week, while 24 firms were suspended from trading the following day.The suspension of brokerage firms contributed to decline in trading at the country’s only bourse. Total daily turnover dropped to Rs 484 million on Sunday from the average daily turnover of Rs 500 million over the past few weeks. Likewise, the weekly turnover had dropped by 54.4 percent to Rs 2.42 billion last week due to suspension of a large number of brokerage firms from trading.
Murahari Parajuli, deputy of spokesperson, told Republica that the suspension of brokerage firms from trading is a form of action that helps buyers to get share certificates and sellers to get cash in time. “If the brokers do not settle the cash on time, it is the investor who has to suffer. That is why Nepse bars brokerage firms from trading”” Parajuli added.
According to the settlement system of Nepse, brokerage firms are required to complete the settlement in T+3 (after 3 days of Trading day) system on the basis of paper versus payment. ‘T’ refers to the day of trading. On ‘T+1’, the buying brokers have to submit bank vouchers for settlement while the selling brokers must submit share certificate on the ‘T+2’. Nepse prepares bills for payment and forwards it to bank on the ‘T+3’. The process requires the buying broker to submit bank vouchers at CDS and Clearing Ltd (CDSCL) on the ‘T+1’ day, while selling broker has to present the paper to CDS and Clearing Ltd on ‘T+2’ day. If any broker fails to meet the requirement within this time, they are barred from trading until they complete the process.
The buying brokers, after consultation with the clients, should present the purchased shares either on the Blank Transfer within ‘T+5’ or the shares should be sent for the ownership transfer process.
Narendra Sijapati, president of Stock Brokers Association of Nepal (SBAN), however, told Republica that the brokerage firms might have failed to settle payment in time because of the delay by investors or other parties involved in the settlement process. “
“If the brokerage firm is suspended from the trading, it means that they cannot do business which a financial loss for themselves”,” said Sijapati“ “The dilly-dallying of the buyers and sellers to deposit cash or their papers make it hard for the brokers to timely settle the cash.”
He also blamed CDSCL for the delay. “The rise in the number of transactions has made it difficult for the settlement company to complete the process,” he said, adding, “Unfortunately, the brokerage firms have to face the consequence”.”
source: republica,3 aug 2014
LINK
On Sunday, Nepse suspended four brokerage firms -- Arun Securities, Primo Securities, Midas Stock Broking and Swornalaxmi Securities -- from trading. As a result, these firms could not trade securities on the first trading day of the week.
A total of 16 brokerage firms were barred from the trading on the first trading day (July 27) of last week, while 24 firms were suspended from trading the following day.The suspension of brokerage firms contributed to decline in trading at the country’s only bourse. Total daily turnover dropped to Rs 484 million on Sunday from the average daily turnover of Rs 500 million over the past few weeks. Likewise, the weekly turnover had dropped by 54.4 percent to Rs 2.42 billion last week due to suspension of a large number of brokerage firms from trading.
Murahari Parajuli, deputy of spokesperson, told Republica that the suspension of brokerage firms from trading is a form of action that helps buyers to get share certificates and sellers to get cash in time. “If the brokers do not settle the cash on time, it is the investor who has to suffer. That is why Nepse bars brokerage firms from trading”” Parajuli added.
According to the settlement system of Nepse, brokerage firms are required to complete the settlement in T+3 (after 3 days of Trading day) system on the basis of paper versus payment. ‘T’ refers to the day of trading. On ‘T+1’, the buying brokers have to submit bank vouchers for settlement while the selling brokers must submit share certificate on the ‘T+2’. Nepse prepares bills for payment and forwards it to bank on the ‘T+3’. The process requires the buying broker to submit bank vouchers at CDS and Clearing Ltd (CDSCL) on the ‘T+1’ day, while selling broker has to present the paper to CDS and Clearing Ltd on ‘T+2’ day. If any broker fails to meet the requirement within this time, they are barred from trading until they complete the process.
The buying brokers, after consultation with the clients, should present the purchased shares either on the Blank Transfer within ‘T+5’ or the shares should be sent for the ownership transfer process.
Narendra Sijapati, president of Stock Brokers Association of Nepal (SBAN), however, told Republica that the brokerage firms might have failed to settle payment in time because of the delay by investors or other parties involved in the settlement process. “
“If the brokerage firm is suspended from the trading, it means that they cannot do business which a financial loss for themselves”,” said Sijapati“ “The dilly-dallying of the buyers and sellers to deposit cash or their papers make it hard for the brokers to timely settle the cash.”
He also blamed CDSCL for the delay. “The rise in the number of transactions has made it difficult for the settlement company to complete the process,” he said, adding, “Unfortunately, the brokerage firms have to face the consequence”.”
source: republica,3 aug 2014
LINK
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