Story of Central Depository System and Clearing
turned true after the formal inauguration of the Central Depository System and
Clearing on 31 March, 2011 by Yuvaraj Khatiwada. Software of the CDS system was
also handed over by Ambassador Rakesh Shud from Embassy of India which was
prepared by Tata Consultancy.
Indian government has provided the technical
support of IRs 92 million which has been approved during the visit of ex Prime
Minister Madhav Kumar Nepal to India by Central Depository Services (India).
Nepal Stock Exchange has signed MoU with Central Depository Services Ltd (CDSL)
to install software for CDS system in Nepal. Later Nepal Central Depository and
Clearing Ltd was established with holdings of 51% by Nepse, 15% by Citizens
Investment Trust (CIT) and rest by commercial banks viz. Nepal Investment Bank,
Bank of Kathmandu, Himalayan Bank, Kumari Bank, NIC Bank, Standard Chartered
Bank, Laxmi Bank and Kist Bank. Despite Nepse registered another company named
as CDS and Clearing Ltd with paid up capital of Rs 300 million as dispute among
the stake holders picked regarding the issue of capital infusion.
Operation of CDS system will open the new era
in capital market of Nepal as it will wipe out inconsistency and manipulation
in stock trading as every transaction and executer can be easily traced out. The
safety, security of physical holding to electronic medium will eliminate
thefts, interceptions and subsequent misuse of certificates while the flow of securities
will also boost due to instant transfers. Hence the transparency level of
trading in this platform will be more secure, clear and easy.
Dependency showed by the authorities starting
from drafting of regulation of CDS; sending drafts to Indian Central Depository
Serviced Ltd and Securities Board of India for comments; market survey from two
different teams of Nepal Stock Exchange and Securities Board of Nepal has
already indicated the expertise level and bureaucratic conflict over here. In
future, it can be expected that different trainings and studies can enhance the
literacy level for addressing and accommodating the problem of Nepalese mud.
Nepse automated trading was
started on Aug 24, 2007 however clearance and settlement of transactions are
still done manually. General Acceptance of
electronic medium for booking keeping of securities is questionable as large
segment of population is still out of the modern internet facilities and
technologies. Similarly, the terms and other situation regarding the
dematerialization are still unknown to the concern brokers also.
Technical self sufficiency and
further advancement can be the big
issue as the next phase of up gradation will be online trading which is very
essential for modernization of the capital market of Nepal. Since the hardware
and software are prepared by the counterparts, it will be costly to hire the
necessary workforce all the time while preparing technician available here for
further can be the right option.
Despite of the establishment of CDS and
Clearing, Depository Institutions are still not in action and likely to face
the Regulatory Hassel during the establishment of
Depository as there is no Depository Act and regulation which will legally
allow accepting monetary deposits from the individuals.
Since CDS company will be operate as per the
Securities Act, 2006 and can open branches in different parts of the country. The
services and settlement can be available from different places. It will collect
Rs 3 per transaction from the investors hence the Transaction
Cost can be higher in this system than it is at present system.
Operation of CDS system, the eagerly awaited
automatic system can boost the transaction for sure which can come into
operation from next fiscal year. Besides, demo trading and interface
introduction program along with awareness program are also expected. Stock
market is the barometer of the economy, hence better performance of the capital
market amid shabby micro and macro economic situation is a nothing but a wrong