NEPSE to open OTC market

The Nepal Stock Exchange (NEPSE) is going to operate an over-the-counter (OTC) market from next week to allow trading of shares belonging to de-listed companies and others failing to meet listing requirements. The Securities Board of Nepal (SEBON) on Tuesday gave the approval to NEPSE to operate the OTC market.

In a statement, SEBON said all 38 companies that have been delisted would be automatically listed in the OTC market. Absence of an OTC market had been preventing investors in de-listed companies from selling their shares.

"Both infrastructure and human resources are ready to kick-start the market. It will come online next week," said NEPSE general manager Rewat Bahadur Karki. He said the stock market had submitted the OTC Market Regulations to SEBON three years ago for its approval.

In most foreign stock markets, companies having a negative net worth are normally de-listed from the stock market and sent to the OTC market. Market analysts said operation of the OTC market would provide an alternative opportunity for traders. One new investment instrument has entered the market, which will help to advance and promote it, they said.

Meanwhile, NEPSE is unveiling a policy to allow investors to surrender their rights to subscribe to rights shares to a third party. As of now, investors have to purchase the rights shares themselves or the company takes them back.

"This will give investors a chance to gain by selling rights shares to third parties, which they buy at face value," said Karki. He said the related regulations were awaiting SEBON's endorsement.

A total of 142 companies are listed on NEPSE. Market capitalization - the value of the listed shares - amounts to Rs 290 billion.
Source:
Ekantipur