Kathmandu. The Stock Brokers Association Nepal (SEBON) has sent its suggestions on the Directive on Margin Transaction Prepared by the Securities Board of Nepal (SEBON-2082).
The Securities Board of Nepal (SEBON) had issued a draft of this directive some time ago and sought suggestions from the concerned bodies. Accordingly, the association has sent its necessary suggestions to the Securities Board.
Although some member brokers want to use the Margin Trading Facility Directive-2074 BS after the implementation of the Directive-2074 BS, it is not possible to implement it at present due to some practical difficulties, some technical difficulties and the problem of resources to provide margin facility, according to the association. “In the meantime, we are grateful to the Securities Board of Nepal for making some amendments to the Margin Trading Directive 2082 public and seeking suggestions,” the association said. ’
Here are the suggestions
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1. The issue is how to manage the amount of investment required by member brokers for margin trading. In this, the main issue we are raising is that when the shares taken from the customers are pledged in banks and financial institutions, there is a situation where the risk is shared and the resources are properly managed. Similarly, we suggest that the provision of margin trading can be a stronger legal basis if it comes through regulations rather than directives.
2. The Securities Board should also issue a directive to the CDSC to fix the securities or amount required to recover the liability of the margin loan given by the securities broker and to freeze the assets of the customer, heirs, other regulatory bodies, investigating bodies, audits, courts or the Government of Nepal g.
Some point suggestions
In lieu of Directive No. 2(h), “Margin Transaction Beneficiary Account” means a Beneficiary Account opened on the recommendation of a securities broker on the recommendation of a securities broker to deposit the shares purchased by the investor through margin transactions.TAG_OPEN_span_43
Instruction No. 3(c){ refers to the distribution of dividend for 2 years in the last 3 years, but it is necessary to insert the word ‘dividend which has gone into profit’ as the provision of dividend is not practical.
Directive No. 3(d)} has been replaced by the statement “The transaction has been completed in at least 180 days after the issuance through the initial public offering”.
Point (c) of Instruction No. 4 is required to be replaced with the sentence “Acquired by the Deposit Member or Invested by the Deposit Member Company”.
In lieu of point (1) of Directive No. 6, it is necessary to mention that the securities broker shall take the amount of the minimum percentage of the market value of the shares of the listed corporate body as per Schedule-1 as the initial margin from the investors.
Directive No. 7 (1){} instead of “It shall be the duty of the customer to maintain the maintenance margin required on the shares purchased by the investor under the margin trading facility due to changes in the market price of the shares.” If this is not done, the securities broker will have to make a margin call to the investor on the same day. ’
If the required margin is not maintained before the commencement of the next trading day after making a margin call pursuant to sub-section (1), the stock broker may sell the shares purchased under the margin trading facility depending on the market conditions and risks.TAG_CLOSE_span_38 TAG_OPEN_span_38 ’
In lieu of (5) point of Directive No. 7, “Notwithstanding anything contained in this Section, if the investor fails to maintain the maintenance margin, the securities broker may take the margin from the investor as collateral of the tradable securities as collateral.” The value of the shares should be calculated only to be 70% of the 180-day weighted average price or the market price, whichever is lower. ’
(4) should be added to Directive 8: “Securities brokers are required to manage resources from banks and financial institutions to provide margin trading services and for that purpose, if the bank or financial institution seeks collateral security, the margin transactions of the customers purchased under the margin trading facility shall not be held in the required quantity of securities so that the required quantity of securities is not withheld. They can. ’
Directive 9 (2) In lieu of Directive 9 (2){{}}, a securities broker may provide margin trading facility to a client and members of one of his or her household within a maximum of 10% of its margin trading capacity. ’
In Directive 13, (3)} points should be added: “Except as above, the stock exchange may, with the approval of the Board, add and amend the procedures as per the requirements of the participants under the margin trading service. ’
