As the repeated ultimatum to the listed companies by Nepse to dematerialize their securities has failed to bring the companies under the central depository system (CDS), the capital market regulator has now taken a lead to fully implement the demat form of shares trading.“All the listed companies have to acquire the membership of CDS and Clearing Ltd (CDSCL) by mid-January next year. We have issued special instruction to Nepse and CDSCL to fully implement CDS by mid-January next year,” Rewat Bahadur Karki, chairperson of Sebon, said in the press meet. “Trading, ownership transfer and clearing of shares of all companies except those dissolved or whose share trading are halted or are on the merger or acquisition process will be automated,” he added.The capital market regulator has also warned that the share trading of those companies that fail to abide by its directive will be automatically halted. Around 17 percent of the securities are to be dematerialized while 40 companies have not acquired membership of CDSCL for the admission of securities to dematerialize them. CDSCL is a subsidiary of Nepse that provides one-window service for centralized depository, clearing and settlement services in the capital market. It acts as a central depository for various instruments (such as equity, bonds, and warrants), especially to handle securities in dematerialized form without physical movement of securities or execution of transfer.Though the first electronic trading of securities was first conducted on April 15 last year, it is yet to come into full-fledged operation. Securities' Central Depository Services Regulation, 2067 (2010) requires full-fledged dematerialized form of share trading within six months from the commencement of the operations of the CDSCL. Sebon had made amendment to the provision upon its discretion, following requests from Nepse, CDSCL and other stakeholders. After finding it difficult to fully implement the CDS system within six months of the commencement of CDS, Nepse, in December last year, had introduced a plan to implement the dematerialized form of share trading in a phase-wise manner. It had enforced the dematerialized form of share trading of 'Banking' group in the first phase in October, unveiling plan to replace the paper-based trading completely by mid-April. Nepse has been attributing the failure to meet the mid-April deadline for full-fledged implementation to the April earthquake, reluctance of listed companies, and lack of awareness among investors.
The Securities Board of Nepal has demanded that all companies listed on the Nepal securities Exchange ( Nepse ) must dematerialise their shares by the middle of January . After repeatedly meeting this requirement and failing to comply , Nepse has sought the advice of the capital markets regulator to ensure all companies now fully dematerialise . The capital market regulator has also demanded that the share trading of those companies that fail to abide by its regulations will be automatically halted .