The Nepal Stock Exchange (Nepse) formally embraced the paperless system of stocks trading on Wednesday, with first transactions of the dematerialised shares of commercial banks.
The CDS & Clearing (CDSC), Nepse subsidiary, has allowed the stocks buyers to own the paperless certificates of the banking group in the first phase.
Sabina Pujari, senior officer at the CDSC, said currently both paperless and physical form of share certificates of the sellers can be traded through the system. “However, the buyers can only receive the ownership certificates in electronic format,” she said.
Having enforced the working procedures on dematerialisation of physical shares 2071, the CDSCL has come up with the guideline for the settlement of physical shares currently in possession of the investors.
The sellers with physical certificates can open a demat account (electronic account) through depository participant (DP), an agent appointed by the CDSC.
As per the guideline, the payment should be settled within T+3 (within 3 days of the trading). The DP needs to submit the ownership transfer and demat request forms within T+7 days at the CDSC. Following the submission, the CDSC will make the buyers receive the paperless form within T+9 days.
Pujari said electronic copies of the share certificates received by the DP would be registered with the concerned company online. According to her, the DP provides ‘Beneficiary owned Identification Number’ to the owners of the paperless stocks.
The investors can place an order using ‘delivery instruction slip’ through the DP or the clearing members (stocks brokers) at the time of selling. Both the DPs and clearing members are directly linked to CDS through software, which helps settle stock transaction instantly.
According to Pujari, each transaction would be given a unique ‘Settlement ID’. “The ID that appears on the CDSC website would help the investors know about the status of their transactions.
As of now, 12 companies have obtained DP licence, including Civil Capital Market, Ace Capital, Investment Management and DP Ltd, Nabil Investment Banking, NIBL Capital Markets, Laxmi Capital Market and Everest Bank. Six others are in the process of obtaining license.
So far 51 companies have registered 180,653 shares into paperless format at the CDSC. According to the CDSC, almost all the commercial banks except Nepal Bank Limited and Kumari Bank have been registered for the paperless transaction.