October 17: The Election Commission has sought clarification from the Securities Board of Nepal (SEBON) regarding its preparation to distribute new licenses to stock brokers, a stock exchange company and commodity exchange markets.

The commission has asked for clarification from SEBON within three days regarding why it went against the Election Code of Conduct 2079. The commission had instructed all government bodies not to issue new license during this period.

The commission clarified that the Election Code of Conduct has a provision which clearly mentions all concerned bodies not to conduct any new programme or to announce, approve or operate new policies, plans and programmes other than those approved in the annual budget.

The board is ready to submit an explanation to the Election Commission regarding its move. Tej Prasad Devkota, information officer of the board, informed that the board will submit an explanation to the Election Commission.

The board argued that seeking application for the license is not against the code of conduct as it was done before the election code of conduct came into force.

According to Devkota, 20 companies have applied for broker license as of 5 pm, Sunday. Devkota also informed us that no application has been received for stock exchange and commodity exchange companies. There is a provision to take the recommendation of the Nepal Stock Exchange Limited (NEPSE) before applying for a new broker license with the board.

Information officer of NEPSE, Murahari Parajuli informed that although only 20 companies have applied for broker licenses with the board till Sunday, 32 companies have received recommendations from NEPSE.

The board had announced application for three types of broker licenses on September 18. On the other hand, the EC had enforced the Election Code of Conduct on September 28.

The board has sought applications for a new stock exchange company, two commodity exchange markets and an undisclosed number of securities broker licenses. Based on the notification issued by the board, the last day to apply for the broker license is October 17. SEBON has set an application deadline of 45 days ending on November 1, for the new stock exchange company and commodity exchange markets.

SEBON has set a paid-up capital of Rs 3 billion for new stock exchanges and a minimum of Rs 200 million to a maximum of Rs 1.5 billion for new brokers.

The new broker licenses to be distributed by the board will be of three types. Based on the capital structure, the board will distribute three types of broker licenses to provide different services.

As per the capital structure, the first kind of brokers providing limited services of stock market transaction require a minimum capital of Rs 200 million to acquire license. Likewise, the brokers providing services like share transaction, depository participant, investment consultancy, investment management and margin business need to have a minimum paid up capital of Rs 600 million.

Similarly, the third type of license will be issued for stock dealers who must maintain a minimum capital of Rs 1.5 billion.

According to the provisions of the Commodity Exchange Market Act, of 2074, the minimum paid-up capital for the operation of the commodity market shall be as determined by the board and must not be less than Rs 50 million,.