October 21: Securities Board of Nepal has submitted a written clarification to the Election Commission over the issue of broker license. The board has clarified that the process of issuing the license to the brokers and stock exchange company is not against the Election Code of Conduct.

The Election Commission had recently sought clarification with SEBON regarding why it should not halt the process of issuing license when the Election Code of Conduct has already been enforced since September 28. The Election Commission had instructed the board to present a written clarification within three days.

The board responded saying that the process of issuing license to the brokers and new stock exchange company was initiated before the Election Code of Conduct came into force.

Executive Director of the board Binay Dev Acharya argued that the topic of issuing license did not surface right now but was pre-planned since a long time. He said that the board took steps in accordance with the budget announcement of the government in order to make the secondary market more competitive.

The board had called for applications to operate a new stock exchange company and two commodity exchanges along with broker's license on the September 18. The Election Commission enforced the Election Code of Conduct ten days later.

According to the board, the capital requirement for new broker license has been fixed between Rs 200 million to Rs 1.5 billion. Brokers will be issued three different types of licenses based on their capital structure.

As per the new provision, 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.