Nepal Stock Exchange

The Nepal Stock Exchange Limited (abbreviated as NEPSE) is the only Stock Exchange of Nepal. It is located in Singha Durbar Plaza, Kathmandu, Nepal. As of November 4, 2020 the equity market capitalization of the companies listed on NEPSE was approximately US$23.35 billion.[1]

Nepal Stock Exchange Limited
नेपाल स्टक एक्स्चेन्ज लि.
TypeStock Exchange
LocationKathmandu, Nepal
Coordinates27.698°N 85.320°E / 27.698; 85.320
Founded1993
OwnerNepal Government (58.66%)
Nepal Rastra Bank (14.60%)
Employees Provident Fund (10%)
Other shareholders (16.74%)
Key peopleLaxman Neupane (Chairman)
CurrencyNepali rupee (NPR)
No. of listings375 (Scrips)
Market capरू275,500 crore (US$24 billion) (2020)[1]
IndicesNEPSE index
Websitehttp://nepalstock.com/

The basic objective of NEPSE is to impart free marketability and liquidity to the government and corporate securities by facilitating transactions in its trading floor through member, market intermediaries, such as broker, market makers etc. NEPSE opened its trading floor on 13 January 1994. As on April 4, 2013, the number of listed companies is 334, which includes Commercial Banks, Hydro Power Companies, Insurance Companies and Finance Companies among others.[2] The Exchange has 50 registered brokers as of April 2019.[3] The NEPSE Index is primary all equity market index of NEPSE. There are 374 companies listed on stock exchange, till the date(as on 04-11-2020) [4] out of which 178 are currently active,till the date (as on 18-01-2021)

It is regulated by the Securities Board of Nepal.[5]

History

The history of securities market began with the flotation of shares by Biratnagar Jute Mills Ltd. and Nepal Bank Ltd. in 1937. Introduction of the Company Act in 1964, the first issuance of Government Bond in 1964 and the establishment of Securities Exchange Center Ltd. in 1976 were other significant development relating to capital markets.

Securities Exchange Center was established with an objective of facilitating and promoting the growth of capital markets. Before conversion into stock exchange it was the only capital markets institution undertaking the job of brokering, underwriting, managing public issue, market making for government bonds and other financial services. Nepal Government, under a program initiated to reform capital markets, converted Securities Exchange Center into Nepal Stock Exchange in 1993.

Currently, Total Market Capitalization is रू295,500 crore (US$25.22 billion) (2021).

Structure

The current paid-up capital of NEPSE is NPR 500,000,000 (approximately US$4.2 million in October 2020). The following table shows the percentage of shareholdings by the respective shareholders on the capital structure:[6]

S.NoOwnersOwnership (%)
1Government of Nepal58.66
2Nepal Rastra Bank14.60
3 Employees Provident Fund[7] 10.00
4Rastriya Banijya Bank6.14
5 Laxmi Bank 5.00
6 Prabhu Bank 5.00
7Others0.60

Members

Members are permitted to act as intermediaries in buying and selling of government bonds and listed corporate securities. At present, there are 50 member brokers who operate on the trading floor as per the Securities Act, 2063 (2007), Securities Regulation, and by-law.

Types of Sub Indices

Subindex/indces of Nepse are categorised as follows:[1]

  1. Banking
  2. Development Bank
  3. Finance
  4. Microfinance
  5. Manufacturing and Processing
  6. Hydropower
  7. Non Life Insurance
  8. Life Insurance
  9. Hotels
  10. Mutual Fund
  11. Trading
  12. Other

Nepse started trading at the secondary market from 100 points on January 1994. The highest point of indices is 1915.39 & Lowest point is 293.

Securities Available For Trading
  1. Shares
    1. Equity Shares
    2. Preference Shares
  2. Debentures
  3. Government Bonds
  4. Mutual Funds

Trading System

NEPSE operates on the ‘NEPSE Automated Trading System ‘(NATS), a fully screen based automated trading system, which adopts the principle of an order driven market. Purchase & Sell of Physical as well as dematerialized securities is done through NATS.

Market Timings

Trading on equities takes place on all days of week (except Saturdays and holidays declared by exchange in advance). On Friday only odd lot trading is done.

The market timings of the equities are:- Market Open: - 11:00 AM Market Close: - 15:00 PM

Odd Lot Trading is done on Fridays. For Odd Lot Trading Market Timings are Market Open: - 11:00 AM Market Close: - 15:00 PM

Friday and Saturday Market remain Closed.

Note:- The exchange may however close the market on days other than schedule holidays or may open the market on days originally declared as holidays. The exchange may also extend, advance or reduce trading hours when it deems fit necessary.

Index-based Circuit Breakers

The index-based circuit breaker system applies at 3 stages of the NEPSE index movement of 4%, 5% and 6%.These circuit breakers when triggered bring about a trading halt in all securities.

In case of 4% movement either way, there would be a market halt for 20 minutes if the movement takes place during first hour of trading i.e. 12:00 PM. In case this movement takes after 12:00 PM there will be no trading halt at this level and market shall continue trading.

In case of 5% movement either way, there would be a market halt for 40 minutes if the movement takes place before 13:00 PM. In case this movement takes after 13:00 PM there will be no trading halt at this level and market shall continue trading.

In case of 6% movement in either way, trading shall be halted for the remainder of the day. No trading shall be done for the day after 6% of movement in NEPSE.

There are two credit rating agencies i.e. ICRA Nepal and Care Ratings Nepal that do ratings of the companies. There are 32 merchant banker companies operating in Nepal

References
  1. "Nepal Stock Exchange Ltd". NEPSE. Retrieved 4 November 2020.
  2. "Nepal Stock Exchange Ltd". www.nepalstock.com. Retrieved 2020-10-27.
  3. "Nepal Stock Exchange Ltd". www.nepalstock.com. Retrieved 2020-10-27.
  4. "Nepal Stock Exchange Ltd". www.nepalstock.com. Retrieved 5 December 2020.
  5. "SEBON". www.sebon.gov.np. Retrieved 2020-10-27.
  6. "Introduction | About Us". www.nepalstock.com. Retrieved 2020-10-27.
  7. "EPF Proposes to Buy All NEPSE Shares to NRB". eng.merolagani.com. Retrieved 2020-10-27.
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