Appointment of new stock brokers faces fresh setback

It has already been three years since the attempt for adding stockbrokers in the capital market started. However, the process doesn't seem to be completed any time soon. The process has been stuck in the Securities Board of Nepal (SEBON) after the Nepal stock Exchange recommended 34 names of prospective stockbrokers. SEBON, the capital market regulator, will have to select the final 27 names.

The process prolonged after SEBON received complaints against around five prospective stockbrokers. "We are probing on the basis of complaints," said Surbir Poudel, chairman of SEBON. The recommended names against whom the complaints have been filed are charged of being involved in the companies listed in the stock market. One of the eligibility criterions for the potential stockbrokers was that they should not have been involved in any company listed in the stock market. Proprietor of one of the prospective stockbrokers has been charged of working in SEBON itself. "It will take some time to take final decision," said Poudel. "We will have to explore documents."

The board will take a final decision itself only if all the issues become clear. "Otherwise, we will return the recommended names to NEPSE for review," said Poudel. SEBON can remove the recommended names from the list, if the allegations proved to be true. "If NEPSE is found to be involved in irregularities, we will take action against it as well," said Poudel. If the complaints couldn't be proved and the cases settle, people will again be given another chance to file complaints against the recommended names.

With the high possibilities of business growth amid growing number of companies, investors and shareholders and increased market capitalisation, a lot number firms have been interested in stockbrokerage business. Currently, there are 23 stockbrokers, whose number had actually decreased from initial 31, despite the growth of the capital market over the last one-and-a-half decades after the establishment of NEPSE.

Of the 34 companies recommended, a few of them have obtained equal marks. Determining the status of these firms will require some time. SEBON can select the companies through lucky draw or other measures. After the completion of the investigation, the board will allow the recommended firms to apply for licences. After they complete all the procedures, SEBON will give them some time for infrastructure development. It will then observe the condition of infrastructure and provided license.

The recommended stockbrokers say that attempts are being made to restrict them from getting licence. "Examination was taken on transparent manner," said a chief of a recommended firm. "Conspiracy is being hatched not to allow adding new stockbrokers and crate ground for conducting new round of examination." NEPSE had also received complaints against few prospective firms prior to recommending the names. Two firms, against whom the complaints were proved, were de-listed. The NEPSE investigation had revealed that people involved in both the firms were also involved in listed companies.


The process of adding new brokers has remained stagnant since 2007 after the Commission for Investigation of Abuse of Authority termed the process non-transparent. The Supreme Court gave a go ahead to the process a year ago, however, the process has not concluded yet.