May 18: The Securities Board of Nepal (SEBON) has expressed its anger over the demand of the Stock Broker Association of Nepal (SBAN) to stop the new broker license process. The board issued a press statement and said that baseless accusations were made against the board with a mala fide intention to keep the broker business within the circle of limited traders.

According to the board, it issued the letter of intent for the distribution of broker license in order to provide equal opportunity to all those who have fulfilled the criteria through legal process within the given deadline. The board expressed its regret that the old brokers tried to hinder the overall market development by publishing certain self-centered, self-interested statements without maintaining their minimum professional dignity.

The board clarified that the fifth amendment to the Securities Dealers (Securities Brokers and Securities Dealers) Regulations, 2064 was approved by the Government of Nepal, the Council of Ministers on September 14 and made a policy arrangement for the open entry of securities brokers.

According to international practices, the board proceeded with the licensing process in accordance with the provisions of the regulation, considering the capital of the organization, the qualification of the directors, the qualification of the head of the organization and the information technology as the main criteria for granting the license. The board published a 30-day public notice on September 18 and invited applications for issuing securities brokers and securities traders' licenses.

Out of the total 46 applications received for the new broker license, the board gave letter of intent to 43 companies. According to the board, 41 applications were for limited-service securities brokers, four were for full-fledged securities brokers and one was for securities traders.

The board clarified that the process for broker license is completed within 35 days from the date of expiry of the application deadline.

The board informed that its efforts to allow 12 "A" class banks’ subsidiaries and 31 other organizations to enter as securities brokers and traders will make the securities market more competitive and transparent. The board claims that the level of securities market services will increase and investors will benefit from competition in services and prices.

The board expects that the demand for the entry of securities brokers, which the investors have been demanding for a long time, will be addressed and there will be competition in the securities market as well as employment opportunities and this will contribute to the overall economy. The board also expressed its commitment to formulate and implement an open and progressive policy for the protection of investors' rights and interests and for the development and expansion of the secondary market in the future as well.

SBAN issued a statement last Friday and demanded immediate suspension of the brokers’ license just like the license of the stock exchange was suspended. Alleging financial irregularities, the association also demanded investigation and action.

The board issued a counter statement claiming that the regulations were drafted and then amended several times by the Council of Ministers.