GENERAL BUSINESS PRACTICES OF LINCH STOCK

MARKET LIMITED, BUTWAL

An Internship Report

Submitted by:

Kabita Bhattarai

Symbol No.310/19

T.U. Registration No. 7-2-303-62-2014

Tribhuvan University

To

Department of Business Administration

Lumbini Banijya Campus

In partial fulfillment of the requirements of the Master of Business Administration

Banking and Finance (MBA-BF) Program

Butwal, Rupandehi

December 1, 2020
 Executive Summary

Linch Stock Market Ltd. is a Public Limited company. It has been registered at
Company Registrar's Office, Tripureshwar, and Kathmandu, Nepal on 12th Paush
2064. Its registration number is 1051/064/065 and registered office is at
Kathmandu Metropolitan, Ward no 10, Kathmandu, Nepal. Its Permanent Account
Number (PAN) obtained from Inland Revenue Department (IRD) is
3028317312064. Its registration number is 1051/064/065 and registered office is
at Kathmandu Metropolitan, Ward no 10, Kathmandu, Nepal. Its Permanent
Account Number (PAN) obtained from Inland Revenue Department (IRD) is
302831731 and business office is located at New Baneshwor, Kathmandu-10,
Nepal and first branch office at Milanchowk, Butwal.

An internship report entitles "GENERAL BUSINESS PRACTICE OF LINCH

STOCK MARKET LIMITED" has been prepared to fulfill the partial requirement
of the project report of MBA-BF T third Semester. The study shows the
importance of the internship program. It will help the students to be fully aware of
the real-world practices before entering into the market as a fresher.

The general objectives of internship program are to relate theoretical studies and
to implement it on real job experience, to get the outer exposure and to study the
entire services provided by the organization. During the internship period in linch
stock market, the real-life job experience was achieved. I spent most of the time in
CSD. During the internship substantial work was done which included receiving
phone calls, taking and placing order, demat account opening online and offline
registration, etc. This is necessary for a student of MBA-BF in order to learn the
practical perspective of real job as they have to compete in the competitive market
and should prove themselves.

II
 Declaration and Endorsement

Declaration

The internship report titled “GENERAL BUSINESS PRACTICES OF LINCH

STOCK MARKET LIMITED “has been written by Kabita Bhattarai, MBA-BF,
Third Semester (2018) at the Department of Business Administration, Lumbini
Banijya campus and has not received any previous academic credit as this or any
other institution

___________________

Kabita Bhattarai

Date:

Endorsement

This internship report titled "GENERAL BUSINESS PRACTICES OF LINCH

STOCK MARKET LIMITED" has been prepared by Kabita Bhattarai MBA-BF
Third Semester (2020) at the Department of Business Administration and has been
endorsed for evaluation to the Office of the Examination Committee, MBA-BF
autonomous Program, Lumbini Banijya Campus, and Butwal.

Prof. Dr…………….
Director /Supervisor)
Department of Business Administration
Lumbini Banijya Campus, Butwal
Date:

III
Certificate of Internship

IV
 ACKNOWLEDGEMENTS

Exposure to the real-life corporate environment has become an essential element

of the academic programs in the present context due to the development of
economies and increasing competition Preparation of any report is not as easy as it
seems when the outcome is in the hands. It is a very rigorous task and requires a
huge contribution and determination of the writer and the surroundings. This
outcome in the hands of the reader had been prepared by the writer with the
support of some very helpful hands. It would be the great dishonesty if they are
not unnamed.

The constant support and inspiration of the management of the MBA program
consisting Prof. Dr. Tara Prasad Upadhyaya, Campus Chief, and Mrs. Maya
Acharya, Director (MBA-BF) of Lumbini Banijya Campus, must be
acknowledged Similarly, this report wouldn’t be in this form without the
supervision and guidance of the internee’s report supervisor, Mr. Dilli Raj
Gautam. I express my heartfelt thankfulness to all of them as well as to all my
other friends who supported me during the preparation of this report.

Also, I am thankful to every one of Linch stock market Ltd, Butwal who directly
supported me during the internship period and helped me to complete my
internship successfully. And special thanks to Poonam Pathak Mam, Branch Head
of Linch Stock Market Ltd for guiding and supervising me during my internship
period.
A series of revisions had been made in the effort of making this report perfect. But
some errors may go unnoticed and remains in the report but they won’t be
repeated in the future if they are pointed out by the readers and the evaluator. The
writer is always ready to accept the feedback for the further improvements.

Kabita Bhattarai
Roll no. 310/19
MBA-BF, Lumbini Banijya Campus

V
 Table of Contents

Title Page i

Executive Summary ii

Declaration and Endrosement Iii

Certificate of Internship iv

Aknowledgement v

Table Of Contents vi

List of Tables ix

List of Abbreviations x

VI
CHAPTER I: INTRODUCTION 1-10

1.1 Overview of the organization 2-3

1.2 Brief History 3-7

1.3 Nature of the Organization 7

1.4 Business Volume and nNumber of employees 8

1.5 Organizational structure (Overall and concerned Department) 8-9

1.6 Objective of the study 10

CHAPTER II

DETAILED DISCUSSION ON THE ACTIVITIES PERFORMED IN

THE CONCERED ORGANIZATION 11-15

2.1 Function of the Concerned departments 11-12

2.2 Detail of Assigned work Responsibility 13

2.3 Problem Encountered during fulfilling Work Responsibilities 15

VII
CHAPTER III

ANALYTICAL COMPONENTS 16-27.

3.1 Analysis of Data collection on any Specific Issues 16-26

3.2 Critical analysis of the Theoretical Concept relating to Practical Experiences

in the Department 26

3.3 Knowledge Gained from the Work Assigned 27

CHAPTER IV

CONCLUSION AND RECOMMENDATION 28-29

4.1 Contribution of internship in knowledge Gain 28

4.2 General Suggestion for the Company 29

REFERENCES 30

APPENDICES 31-35

VIII
 Lists of Tables

Tables Titles Page No.

Table 1 Department and working days 13

Table 2 Activities performed in linch stock market 14

Table 3 Brokerage commission for equity 23

Table 4 Brokerage commission for bond 23

Table 5 Brokerage commission for all other stock except 23

Government securities

Table 6 Numbers of customers 25

Table 7 Capitalstructure 26

IX
 List of Abbreviations

NEPSE : Nepal Stock Exchange

MBA-BF : Masters of Business Administration – Banking and finance

CSD : Customers Service Department

LTD : Limited

KYC : Know your customers

TMS : Online trading management system

IPS : Inter Bank Payment System

CDS : Central Depository System

X
 CHAPTER I
INTRODUCTION

Tribhuvan University has designed various management degrees under Faculty of

Management (FOM) and among them one of the outstanding developments is in
the form of Masters in Business Administration Banking and Finance (MBA-BF),
This program is a felt necessity to link between knowledge and practice to give
professionalism as the pressing requirement of HRD Development to suit micro
economic needs of the country. It is a two–Year program designed with four
semesters as a complete package of MBA eligibility and tries to cover the
operations and transactions of the practical business world with particular focus
on Nepalese context. This course deals with the fundamental concept of corporate
worlds which are essential for any persons aspiring to be the active participants of
this competitive world. The MBA program aims to overcome the drawbacks of
other existing management degrees of TU and hence focuses on the development
of the students through field visits, report preparation, presentation and of course,
internship program. The entire above mentioned and other course matters help the
educational institutions to produce the skillful, confident, knowledgeable and
dynamic middle level managers for this country.

As per the course requirement of the MBA program every third semester student
should prepare the internship report after the completion of the one month’s
45days internship in the institution and the students of Lumbini Banijya Campus
are not the exception. Being the student of LBC, I cannot be the exception. Since I
completed the internship in Linch Stock Market LTD Butwal, this report is the
outcome of the valuable real-life experiences I obtained during the internship in
that organization. Getting involved in stock market as an intern in CSD I confront
real job-place experience and got the chance to feel the different situations from
the perspective of both the employees and the customers. This internship had been
fruitful because it had helped me to see the same things from the two opposite
directions and find the difference in the perception of these two completely
opposite sides as a neutral observer.

1
1.1 Overview of the Organization
A broker is an independent person or a company that organizes and executes
financial transactions on behalf of another party. They can do this across a number
of different asset classes, including stocks, forex, real estate and insurance. A
broker will normally charge a commission for the order to be executed. Some
brokers will provide you with market data and give you advice on the products
you want to buy or sell – depending on whether they are a full-service broker, or
execution only. However, a broker must be licensed to give advice and execute
the sale, and they will only perform trades on your behalf once you have given
them the go-ahead.

The history of securities market began with the floatation 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. 

Members of NEPSE are permitted to act as intermediaries in buying and selling

of government bonds and listed corporate securities. At present, there are 50
member brokers with 43 branches, who operate on the trading floor as per the
Securities Act- 2007, rules and bye-laws. The broker house and its branches are
expanded over 21 different cities of Nepal. 

Linch Stock Market Ltd. is a Public Limited company. It has been registered at
Company Registrar's Office, Tripureshwar, and Kathmandu, Nepal on 12th Paush
2064. Its registration number is 1051/064/065 and registered office is at
Kathmandu Metropolitan, Ward no 10, Kathmandu, Nepal. Its Permanent Account
Number (PAN) obtained from Inland Revenue Department (IRD) is 302831731
and business office is located at New Baneshwor, Kathmandu-10, Nepal and first
branch office at Milanchowk, Butwal.The company has been awarded the stock
brokerage license from Securities Board of Nepal (SEBON) on 9th Ashad 2068.

2
In order to operate stock brokerage services. The company has also been provided
the broker membership number 41 from Nepal Stock Exchange Limited (NEPSE)
on 26th Ashad 2068. The company has also been awarded the clearing member
license from CDS and Clearing Limited (CDSC) for clearing and settlement of
stocks traded stock in stock exchange through its member (stock brokers).

Mission and vision of Linch Stock Market

The company Committed to expand the areas of involvement with the view and
objective of expanding and to give a new vision in the practice of the stock
brokerage services by involving young and energetic personnel to work within the
company. The company is committed to fulfill expectation of our valued investors
by providing brokerage and depositary Participation (DP) services in the single
door. At present the company has appointed sufficient staff in difference position
in order to provide excellent service to the customers. Aim of the company is to
provide best stock brokerage services to both individual investors and corporate
investors.

1.2 Brief History

1.2.1 Meaning of Security Broker

Stock brokers are the licensed agents who buy and sell stocks and other securities
for both retail and institutional clients, through a stock exchange or over
the counter, in return for fee or commission, stock broker are the
licensed agents who provide counsel on what and when to purchase and whether
to hold or sell the securities. They execute the buy/Sell orders on the investor’s
behalf.  The percentage of the transaction as compensation received from either
buyer and/or seller is called as Brokerage Commission. As an agent the stock
broker is merely performing a service for the investor.

This means that the broker will buy for the buyer and sell for the seller, each time

making sure that the best price is obtained for the client.  An investor should
regard the stockbroker as one who provides valuable service and information to
assist in making the correct investment decision. They are adequately qualified to
provide answers to a number of questions that the investor might need answers to

3
and to assist in participating stock market. Security brokerage firm comes into
existence mainly with the objective of facilitating the buyer and seller of financial
assets.  According to Security Business Person Regulation, 2064 ““Stock Broker
means a corporate body or a company licensed as Stock Broker from the Board
for providing brokering services of purchasing and/or selling the securities in the
name of client only as pe/r the client’s order.”

1.2.2 History of Security Brokerage

History of Security Brokerage Industry The first stock brokers were the Real
Merchants of Venice in the 1300s who were money lenders, debt traders, and
purchasers of government debt.  These Venetians were the first group to buy and
sell government securities for like modern brokers, they met clients with slates
containing various governmental issues available for purchase.  The French,
English, and Dutch governments all signed charters for East India trading
companies during the 1600s.  These companies changed the business model in
that they offered investors the opportunity to purchase stocks paying dividends on
all trading voyages made by the company rather than by individual voyages. 
As there were no formal stock exchanges, investors had to track down brokers to
buy in. In 1790, the first financial securities were created in the United States
when the federal government issued $80 million in bonds to pay for its
Revolutionary War debt. Two years later, 24 of the most prominent stock brokers
met to sign the Buttonwood Agreement, agreeing to trade securities for
commission.  The earliest brokerage firms were established in London coffee
houses, enabling individuals to purchase stocks from a variety of organizations.
They formally founded the London Stock Exchange in 1801 and created
regulations and memberships. The system was copied by brokerage firms
across the world, most notably on Chestnut Street in Philadelphia. Soon, the US
exchange was moved to New York City and various firms like Morgan Stanley
and Merrill Lynch were created to assist in the brokering of stocks and securities. 
The firms limited themselves to researching and trading stocks for investment
groups and individuals.  During the 1900s, stock brokerage firms began to move
in a direction of market makers.  They adopted the policy of quoting both the
buying and selling price of a security. This allows a firm to make a profit from
establishing the immediate sale and purchase price to an investor. The conflict

4
with brokerage firms setting prices creates the concern that insider trading can
result from the sharing of information. Regulators have enforced a system called
Chinese Walls to prevent communication between different departments within
the brokerage company. This has resulted in increased profits and greater
interconnection within the financial industry.  The creation of high valued
brokerage firms like Goldman Sachs and Bear Sterns created a system of
consolidation. Working with hundreds of billions of dollars, the larger
firms began to merge and take over smaller firms in the last half of the 20th
century.

1.2.3 History of Stock Market in Nepal

The history of security market in Nepal dates back to 1937 when Biratnagar Jute
Mill and Nepal Bank Limited floated their shares in the Market. The Company
Act was introduced in 1964. Government Bonds were issued for the first time in
1964. And the Securities Exchange Centre Limited was established in 1973 to
facilitate and promote the growth of capital markets, with the initiative of the
government of Nepal and Nepal Rastra Bank. It was the only capital market
institution that undertook the responsibilities of brokering, underwriting,
managing public issue, creating markets for government bonds and other
securities. It was converted into Nepal Stock Exchange (NEPSE), under a
program to reform capital market only in 1993.

Till the date NEPSE is the sole stock exchange of Nepal with 219 companies
listed in the secondary market for trading. NEPSE operates under the Securities
Act 2007 and is regulated by Securities Board of Nepal (SEBON).

1.2.4 Introduction of Nepal Stock Exchange

NEPSE is the first and the only secondary capital market in Nepal. The
introduction of Capital Act in 1964 laid the foundation for the formation of the
capital market institution in Nepal. As a result, Securities Exchange Center was
established in 1973 with an objective to facilitate and promote the growth of the
capital markets in Nepal. It was the only capital market institution that was
established with the initiative of government of Nepal and Nepal Rastra Bank. It

5
took the responsibilities of brokering, underwriting, managing public issues,
creating market for government bonds and other securities. Later it was converted
into Nepal Stock Exchange (NEPSE), under a program to reform capital markets
in the year 1993.

NEPSE operates under the Securities Act, 2007.It is regulated by the Securities
Board of Nepal (SEBON).  There has been a number of changes occurred in the
organization. Since its establishment so as to upgrade itself and also to provide the
efficient and effective services. In August 2007, the company introduced
automated trading system and later in May 2008 it turns itself from the not for
profit organization to a profit seeking organization.

Vision
NEPSE contributes to creation of the wealth of nation by adding value through
trading of securities.

Mission
•    Actively pursue strategies that contribute to the growth of capital market.
•    Provide facilities to trade equities, bonds, debt securities and derivatives.
•    Promote corporate culture that encourages employee commitment, creativity
and team work
•    Maintain a balanced and responsive regulatory framework that will enhance
market integrity and investor confidence.
•    Focus on customer orientation, strike for organizational excellence and
promote professionalism within the industry.

Goal
•    To impart marketability and liquidity to the listed corporate securities along
with registered government securities.
•    To facilitate transactions in its trading floor through member, market
intermediaries, such as broker, market makers etc.
•    To list corporate as well as government securities like equity shares, bonds etc.

6
Objectives
The basic objective of NEPSE is to provide liquidity to the government bonds and
corporate securities by facilitating transactions through intermediaries, such as,
brokers, market makers, etc. The other important objectives of NEPSE are to
protect investor’s rights and develop a secondary market, as prescribed in the
Memorandum of Association (MOA) and Article of Association (AOA) of
NEPSE.

Functions
The main function of NEPSE is to provide trading floor for trading on securities.
Beside this prime function, NEPSE performs the following:
•    Provide trading floor for the listed securities.
•    Enlist corporate as well as government securities like shares, preferences
shares, development bonds and corporate bonds.
•    Supervise and regulate its members.
•    Timely dissemination of information.
•    Act as a front line regulator for members.

1.3 Nature of the Organization

Linch stock market Ltd is profit as well as service oriented organization. It was
established with the authorized capital of one crore and at present it has only two
branches one is located in Kathmandu and another is in Butwal. The head office
of linch stock market is Kathmandu. It provides various banking services to a
wide range of customer. The main concern of linch stock market Ltd is to provide
best stock brokerage services to individual as well as corporate level. It takes
charge on the selling and buying of securities, which is known as brokerage
commission.

7
1.4 Business Volume and Number of Employees.
Linch stock market limited has reported a net profit of Rs97 lakhs. For the last
quarter end of the current fiscal year 76/77. It has Rs 3crore, 43 lakh paid up
capital. Total number of employees working in linch stock market is altogether 20.
It has providing brokerage services to more than 2000 customers. The major
customers of linch Stock Market Ltd are Business persons Students, Children,
women and old age people, Employees of different organization and Common
people. Among 2000 customers more than 60% are online users.

1.5 Organizational structures (overall and concerned department)

An organizational structure is a system that outlines how certain activities are
directed in order to achieve the goals of an organization. These activities can
include rules, roles, and responsibilities. The organizational structure also
determines how information flows between levels within the company. The
organization structure of Linch Stock Market Ltd is,

Branch Head

Customer Clearing and

Account
Service Settlement
Deparment
Department Deparment
 Customer service Department
This department is mainly concerned with customer’s service. CSD focus on the
instant service for the customers. This department is mainly concerned with the
trading activities of the organization which involves buying and selling of
securities in the secondary market. It takes the order of the client department and
places the order in the market depth. The matching of the orders in the market

8
leads to the execution of the order. This department has to work as per the
instruction provided by the clients and make the trade as per the order filed. It is
responsible for attending the phone calls, taking the orders from the clients,
opening the client id, taking the details of the clients, making telephone calls and
inform the clients about the execution of trade, filing of the certificates of
securities, ownership transfer letter, blank transfer letters, etc. on behalf of client.

 Account Department
Account Department in linch stock market Ltd has the similar function as the
account departments in other organization. It is responsible for maintaining the
details of the accounting activities performed in an organization with the clients,
companies, brokers and other parties. The activities performed by the account
department are listed below:
To keep the record of the financial activities occurred in an organization for a
given period of time
To manage the funds and keep the track of all activities relating to finance.
To collect vouchers, cheques, drafts etc. from the clients, agents, companies, etc.
To make payments to the creditors, selling brokers, staffs, employees etc.
To prepare the financial report of the financial activities at the end of a fiscal year.

 Clearing and Settlement Department

Clearing and settlement Department of Linch Stock Market Limited carries out
the numerous activities in an organization. It keeps the record of all the transaction
occurred in a day, prepare bills and vouchers for those transactions, make the
entry of the transaction occurred in the system, make the payments in the banks
and keep the record in the system. This department is also responsible for getting
the approval of the transaction from the clearing and settlement department at
NEPSE. Besides, it also makes the further processing of the ownership and blank
transfer mechanism on behalf of the client.
In this way, the various departments work together to accomplish the activities
smoothly and efficiently. Each department has its own working area,

9
responsibility and authority. The proper management of the organization has led
to the smooth operation of each department to achieve the overall goal of an
organization.

1.5 Objectives of the Study

The internship program in MBA is primarily designed to the students to enable
them as grounded career persons who already know the real-life working
situations and had already felt the pressure of the job place environment. It helps
the students to be prepared for the future through the little knowledge gained from
the 45 Days of the job-like experience. It is also a platform to show the ability to
mold the theoretical knowledge learnt throughout the MBA program as per the
requirement of the job placement. All of these things can be jotted down given the
following points in nutshell below:
•    To evaluate the function performed by of Linch Stock Market Ltd.
•    To analyze the procedure of buying and selling securities followed by Lybnch
Stock Market.

10
 CHAPTER II
DETAILED DISCUSSION ON THE ACTIVITIES
PERFORMED IN THE CONCERED ORGANIZATION

2.1 Functions of concerned Department

Functions of customer service department.

 Assist customer to fill up the form, check the required documents and
verify the photocopy with original one.
 Forward the registration form to branch head for verification.
 Informing customers about the brokerage charges.
 Informing customers for IPS and EDIS of share after buying and selling of
securities.
 Receive incoming calls and respond to the queries of the customers
 Account opening (de-mat), registration for online and offline trading
 Assist in filing and indexing.
 Collecting Cheque as a collateral from the customer for online trading
 Solving the queries of the customers.
 It takes order and place the order for buying and selling of share.
 It is responsible for attending the phone calls, taking the orders from the
clients.
 Opening the client id, taking the details of the clients.
 Making telephone calls and informs the clients about the execution of
trade.
 Filing of the certificates of securities, ownership transfer letter, blank
transfer letters, etc. on behalf of client.

11
Functions of Account Department.

 The activities performed by the account department are listed below:

 To keep the record of the financial activities occurred in an
organization for a given period of time
 To manage the funds and keep the track of all activities relating to
finance.
 To collect vouchers, cheques, drafts etc. from the clients, agents,
companies, etc.
 To make payments to the creditors, selling brokers, staffs, employees
etc.
 To prepare the financial report of the financial activities at the end of a
fiscal year.

Functions of Clearing and Settlement Department.

 It keeps the record of all the transaction occurred in a day.
 Prepare bills and vouchers for those transactions.
 Make the entry of the transaction occurred in the system, make the
payments in the banks and keep the record in the system.
 This department is also responsible for getting the approval of the
transaction from the clearing and settlement department at NEPSE.
 It also makes the further processing of the ownership and blank transfer
mechanism on behalf of the client.
 This department also handles the function of making the approval of the
signature of the seller giving a permission to sell the securities which is
verified by the Registrar and Transfer Agent of the respective company.

12
2.2 Details of Assigned work and responsibility.

The linch stock market Ltd is one of the financial intermediaries whose
primary function is to execute the buying and selling transaction
between the buyer and seller of financial assets.  During the 45 days
of internship period, various activities were performed as required by the
department of the security broker as intern. Though the internship was
conducted in the Customer Service Department Account and administrative
department as well as clearing and settlement department of the linch stock
market under the guidance of branch head. Placement in these departments
provided the exposure and understanding of the various service and procedures
of the stock market and its relationship with its customers. All the experience
and knowledge gained in the 45 days of the internship is explained the
following table.

Table 1
Department and working days

S.N Departments Working days

1 Customer service department 15days
2 Account Department 15days
3 Clearing and settlement department 15days
Total 45days

13
 Table 2

Activities performed in Linch stock Market

Name of the Department Activities Performed

Customer service Department  Opening and managing
customer’s account.
 Handling Sales/purchase bill
report.
 Receiving phone calls and
dealing with customer’s
inquiry.
 Order taking and placing
 opening client Id.
 Making telephone calls and
informs the clients about the
execution of trade.
Account Department  collect vouchers, cheques,
drafts etc. from the clients,
agents, companies,
 Record keeping, order
maintain.
Clearing and Settlement  Prepare bills and vouchers of
Department transactions.
 Keeps the record of all the
transaction occurred in a day.
 Setting collateral in system for
online trading.

14
2.3 Problem Encountered During Fulfilling Work Responsibility.

Despite lots of opportunities prevailing for the study, there were few problems
that arise while fulfilling the work responsibility.

 We are still suffering from global pandemic (covid-19), so that direct

interaction with the customer’s was not possible.
 It was difficult to have the in-depth study of all the departments due to the
time constraints.
 The company’s policy in keeping some matters confidential prevented
from analyzing various critical facts and issues.
 Time and resources constraints are the major
 Despite the sincere effort and willingness to help of the employees, their
busy schedules could not give to interne as per the expectations.
 Since the intern is confined to few departments, only the related data of
limited departments are available
 However, ignoring all limitations, it has been best tried to gain adequate
stock market knowledge and sincerely perform the task assigned.

15
 CHAPTER III
ANALYTICAL COMPONET

3.1 Analysis of data on any specific issues.

3.1.1 Trading System
NEPSE is a fully automated order driven market having continuous auction during
trading hours.
Automated trading mechanism and its major features:

NEPSE has replaced the open out-cry trading system with fully automated screen-
based trading system (ATS) since 24TH August, 2007 under the CFG project of
Government of Nepal aided by ADB. The system is able to eliminate all possible
human errors as seen in the earlier open out-cry system. Several international
practices are incorporated to make the system internationally applicable and
modifications are also made to customize the existing rules and regulations of the
country. Therefore, the following features are found in the automated trading
system.

• Client Management
Client management enables a broker to create a client. Without creating a client,
the broker will not be allowed to place order for that particular client. The broker
has to insert various details of the client out of which client code is a unique code
for that particular client for a particular broker. After a broker receives the order
the broker has to place order for that client on FIFO basis of the order registered
by the client's office.

16
•    Order
It is an expression of interest to either buy or sell a specified of stock either price
or at the current market price. This order is given by the clients to the licensed
brokers. There is an order entry form in the system through which the brokers
place the purchase or sell order. All the required information either for purchase or
for sell of a stock should be submitted by the broker. Generally, four types of
order can be placed in the system

Regular:
An order which is completed on the exchange and that confirms the order of lot
size or greater than that.

Odd-Lot:
An order which is completed on the exchange and that confirms the order less
than lot size.

Manual:
An order which is placed by the brokers and is reported individually by the buying
and selling brokers.

Block:
An order which is placed by the brokers and confirms to the minimum block trade
specified by the exchange and is reported individually by the buying and selling
brokers.

•    Price
It is the price, which the buyer has quoted in his/her buy or sell order. The
investors as usual can quote in three ways in their order forms. They can quote
fixed price, price in range or market price. The brokers if find the price within
range they enter the details to execute the transactions. In present system the order
entry form in computer has been developed to indicate the price either in limit or
market. If the price is given in range they will insert the best price for clients. The
broker must always attempt to execute the transaction to protect their client's
interest. If the investor is a seller s/he must attempt to execute the transaction at  

17
higher prices and if s/he is buyer the member broker must attempt to buy at low  
price. It is the negotiation process through which they execute the transaction.
If the price is market the broker will execute the order at market price. It means
buy or sell the shares at market price.

•    Execute At
This represents the phases of trading when to execute the order. There are three
phases during which the broker can place the order to execute the transactions.
Such phases are:

At the Open (ATO):

ATO indicates the order should be executed when market opens. In order to
execute the transaction at ATO the member brokers have to place the order to
execute it at ATO. All the ATO orders will be accumulated in the system till ATO
execution time and after the time reaches the ATO orders will be executed at the
best price at the opening of transactions. ATO gives the price, quantity and time
priority for the execution.
In this case price can be quoted within the range of 5% of previous close price.
Once the ATO phase is over price can be quoted within the range of 2% of LTP.
ATO determines the opening price for the stock. If there are no matching ATO
orders for a stock the open price of the stock will be equal to the previous close
price.

Continuous Trading:
This is the phase that indicates the orders should be executed while the market is
in progress.

At the Close (ATC):

This is the last phase that indicates the order should be executed when the market
closes. The system has provided facility to generate the ATC price of a stock
either by taking the average of the price of last "n" transactions or the average of
the price of the last n minutes.

18
Currently NEPSE adopts the average of last n transactions where n equals to 1 i.e.
the LTP of the stock at close is the ATC price or closing price.

•    Retain Until

The customer can give the order to retain until the specified period as below
unless it is executed.
End of Day (EOD)
This indicates the placed orders if not executed will be retained until the end
of today.

Good till Cancel (GTC)

This indicates the order if not executed should be retained until it is canceled. This
system has provided the facility for exchange to set the time period in days till
which the pending orders can be retained in GTC.

•    Conditions
This specifies the conditions under which the order could be executed. The
conditions are as below.

None
This indicates there are no conditions for execution of orders.

Immediate or Cancel (IOC)

This condition indicates that the orders should be executed in full or part
immediately the unexpected order will not be sent to public order book but
cancelled immediately by the system.

Fill or kill (FOK)

This condition indicates the order must get executed entirely or cancelled
immediately. The unexpected order will not be sent to Public order book but killed
(cancelled) immediately. NEPSE has modified the system allowing entering the
quantity of a stock to be traded either at the multiple of lot size or greater than
that.

19
All or None (AON)
This condition indicates the order must get executed entirely & if not executed the
order is sent to public order book. In this condition too, NEPSE has modified the
system allowing entering the quantity of a stock to be traded either at the multiple
of lot size or greater than that.

•    Market Depth
It is the provision, which the stock exchange has made to facilitate the bid and
offers. Under this provision the member broker before inserting the bid and offers
for certain price for the bid and offers for certain quantities at certain price for the
particular company can view the bid and offer placed by other brokers. This not
only facilitates the negotiation but also contributes for the execution of
transactions at market price.

•    Settlement
NEPSE has adopted a T+3 settlement system. The settlement will be carried out
on the basis of paper verses payment. The trading is done at "T" and at T+1; the
buying brokers have to submit bank vouchers for settlement with covering letter.
At T+2, the selling brokers must submit share certificate with covering letter. At
T+3, NEPSE prepares to bill for payment and this will be forwarded to the bank.

Once the settlement is done the buying brokers with the consultation of the clients
must decide and present the purchased shares if they want to record it as blank
transfer. This must be completed within T+5.

•    Blank Transfer
Under this mechanism an opportunity to derive the market benefit is provided. But
presently, the buying brokers must complete the BT process within T+5. The
transactions that are executed can be recorded in different way and NEPSE has
considered all possible retention. The followings are the major key points to be
considered.This is related only with buy of the securities.The buyer may decide to
have market benefit either to have capital gains or to minimize the loss.

20
In order to do this s/he may partly send for name transfer or may register it in
blank transfer.If she/he register total purchase in blank transfer and can put for
sale and if only the part of the shares is subscribed then s/he can handover the part
and the part can be forwarded for name transfer to the concerned company. In
order to do this s/he has to cancel the blank transfer for that portion.

3.1.2 Trading Hours:

Trading on equities takes place on all days of week (except Saturday and holidays
declared by nepse) both board and odd lot. On Friday only odd lot of ordinary
share is trading.

Trading hour on Sunday to Thursday

Market Open -11:00 hours
Market Close - 15:00 hours

3.1.3Securities Available for Trading

Currently NEPSE facilitates trading in the following instruments.
A. Stocks
B. Bonds
C. Government Bonds
D. Mutual funds

3.1.4 Price Range

Price Range is applicable on individual securities. The trading of the individual
securities is not halted but allowed to trade within the price range.

The price band is 10% of previous close on either way. During the ATO (At the
opening) session the range is 5% on either way of Previous Close Price. After the
band is 2% on either way of the Last traded price till it reaches to 10% of the
previous close.

3.1.5   Circuit Breakers

21
NEPSE started to use circuit breaker for a chance of price in trading of an
individual share on a day since August 2006. If a price of a share changes more
than 10% in its trading in a single day, the trading of the share is halted by using
circuit breaker. This rule of halting the individual share to trade for the day has
been amended later and the trading could be done within a price range of 10%
change on previous day's closing price. NEPSE has implemented index-based
circuit breakers with effect from 2064/6/4 (21 September 2007). In addition to the
circuit breakers, price range is also applicable on individual securities.

3.1.6 Index-based Trading Halt

The index-based trading halt system applies at 3 stages of the NEPSE index
movement of 3%, 4% and 5%. These circuit breakers when triggered bring about
a trading halt in all equity.
• In case of 3% movement either way, there would be a market halt for 15 minutes
if the movement takes place during first hour of trading i.e. 13:00 hours. In case
this movement takes after 13:00 hours there will be no trading halt at this level
and market shall continue trading.
• In case of 4% movement either way, there would be a market halt for half an
hour if the movement takes place before 14:00 hours. In case this movement takes
after 14:00 hours there will be no trading halt at this level and market shall
continue trading.
• In case of 5% movement in either way, trading shall be halted for the remainder
of the day.

3.1.7 Brokerage Commission

Brokerage fee is a fee charged by a broker to execute transactions or provide
specialized services. Brokers charge brokerage fees for services such as purchases,
sales, consultations, negotiations, and delivery. There are many types of brokerage
fees charged in various industries such as financial services, insurance, real estate,
and delivery services.

22
 Table 3
Brokerage commission for equity

Brokerage Commission Amount

Up to Rs 50000 0.6%
Over Rs 50,000 to up to Rs 0.55%
500,000
Over Rs 500,000 to up to Rs 2 0.5%
million
Over Rs 2 million to up to Rs 10 0.45%
million
Over Rs 10 million 0.4%

Table 4
Brokerage commission for Government Bond

Trading amount Brokerage charge

Up to Rs 500000 0.2%
Over Rs 500000 to Rs 5000000 0.1%
Over Rs 5000000 0.05%

Table 5
Brokerage commission for all other stock except equity and Government
Bonds

Trading Amount Brokerage charge

Up to 5,00,000 0.3%
Over Rs 5,00,000 to Rs 50,00,000 0.25%

23
Over Rs 50,00,000 0.20%

The Securities Board of Nepal (SEBON), the securities market regulator, has
reduced brokerage fees on share and bond transaction by up to 60 per cent. From
now onwards, stockbrokers cannot charge service fee of more than 0.60 per cent
on sales or purchase of shares of up to Rs 50,000 in value. This means investors
selling or buying shares of up to Rs 50,000 should not provide more than 0.60 per
cent of the transaction amount as service fee to brokers. Earlier, fee for share
transaction of up to Rs 50,000 stood at one per cent of the transaction value.

Similarly, stockbrokers cannot charge a service fee of over 0.55 per cent of the
transaction value on sales or purchase of shares worth over Rs 50,000 to up to Rs
500,000. Earlier, this fee stood at 0.9 per cent of the transaction value.

Likewise, service fee for sales or purchase of shares worth over Rs 500,000 to up
to Rs two million has been fixed at 0.50 per cent of the transaction value, while
service fee for sales or purchase of shares worth over Rs two million to up to Rs
10 million has been fixed at 0.45 per cent of the transaction value. The service fee
for sales or purchase of shares worth over Rs 10 million has been fixed at 0.40 per
cent of the transaction value.

These revisions were made as the Ministry of Finance. The SEBON has directed
Nepal Stock Exchange, the stock market operator, to bring the new service fees
into effect immediately.

3.1.7 Capital structure of Linch Stock Market Ltd.

The term capital structure generally refers to the capacity of the organization to
meet its short term and long-term obligations.

24
 Table No. 6

Capital structure

S.N Particulars Amount in Rs

1 Authorized capital 5 crores

2 Issued Capital 10 crores

3 Paid up capital 3 crores, 43 lakhs

3.1.8 Major Customers and Market

The major customers of Linch Stock Market Ltd are as follows.

 Business persons

 Students

 Children, women and old age people

 Employees of different organization

 Common people

25
 Table No 7

Number of Client

S. N Particulars Customers

1 Number of clients 2000

2 Offline users 1200

3 Online users 800

4 Demat Account 1000

3.2 Critical analysis of the Theoretical concept relating to

practical experiences in the department.

The things that I had studied are completely different from theoretical (bookish
knowledge) concept. Theoretical concept describes about theory that we had
studied in books. But practical knowledge is different where the theory is used
in the real life or we can say in the working place. During internship of 45
days, I was specially placed in the CSD department where I used to open the
demat account opening, opening and managing customers account, handling
sales/purchase bill report, receiving phone calls and dealing with customer’s
inquiry, order taking and placing Opening client Id, making telephone calls and
informs the clients about the execution of trade. The daily activities that I
learned during internship were totally different from the things I had learned in
school and college. Besides that, I also got chance to develop my confidence
level, personality, communication skills and so on. It was the wonderful

26
 opportunity to work in the real field as internee and make long term
relationship with Linch Stock Market Limited.

3.3 Knowledge Gained from the Work Assigned

I got such opportunity to work with knowledgeable person of customer service of
Linch stock market Limited. Following are the knowledge that I gained from my
internship.

 Real-life Working is a very pressurized task and hence cool and calm
mind is essential for success.
 Learned to speak, function and work in corporate way
 Learned the institutional culture and the values in the corporate world.
 Importance of effective communication in the job-place
 Interact and behave in a professional way to the clients to make them
satisfied with your services
 Understood the trading mechanism in a whole and the way in which the
stock price is negotiated through CDSC.
 Had an idea about the various party involvements in the secondary market.
 Learned to treat each individual differently because of the individual
differences among them.
 Had an idea to handle the system of that TMS

27
 CHAPTER IV
Conclusion and Recommendation

4.1 Contribution of Internship in Knowledge Gain.

This internship was very useful for me to gain new knowledge as well as the
practical implications of various theoretical knowledge. All the lessons learnt
can’t be express in the language form because much knowledge is related to the
realization rather than the new knowledge.

After the completion of this internship of 45 days, the real meaning of the work
life and the actual pressure of the job had been felt. This feeling had changed the
previous perception of the job-life. It had been a fruitful experience for the present
as well as for the future also. The ‘to be known world’ had been known now and
also a thought that, besides books and knowledge of the syllabic books there are a
lot of things to be known and learnt, had emerged. It was really a great
opportunity to know new kinds of people, new kinds of experiences, new kind of
environment and a completely new atmosphere around us. It was learning by
doing kind of opportunity and had been successful to make a change within
myself.

Being in Linch market as an interne wouldn’t be much interesting without the

support of the Linch family. From them, I have learnt that the workplace is also a
family for any worker and how important is it for the social wellbeing of the
worker. I also got the chance to get wider variety of knowledge due to the support
of the Linch stock employees.
While concluding this report, the interne is intensely satisfied with the internship
and its outcome. This experience will not only be beneficial today but also in the
future also when the interne should work in the real life.

28
4.2 Suggestions to the Concerned Organization.
Linch stock market has customized its services according to the needs and wants
of the customers. Majority of the customers are satisfied with the services
provided by Linch stock market. The major reason behind it was cooperative and
responsive staff.

There are few suggestions to the Linch stock market which will help them to
further increase their service and get desired position in the market. Linch stock
market should be competent enough to compete with other brokerage firm. Linch
stock market should be able to make people aware of its services. The limited
number of employees is also the problem in the organization even though they are
handling the task. In this modern age organization should be quick enough to
adopt new technology in comparison to its rivals. As well as Interns should be
fully guided by staffs in performing the routine activities of the organization.

29
 REFERENCES

Roy, A. (1998a) chaos theory. New York: Mcmillian Publishing Enterprises.

Thapa, K. (2010). Financial Institution and Market. Kathmandu. Ashmita

Publication

http://www.nepalstock.com/

https://www.linch.com.np/

http://internshipreportpresentaion.blogspot.com/

www.google.com

30
 APPENDIX

ker Code Broker Name Landline

1 Kumari Securities Pvt. Limited 01-4418036

1_RWS Kumari Securities Pvt. Limited 061-537411

3 Arun Securities Pvt. Limited 01-6916470

4 Opal Securities Investment Pvt. Limited 01-4420313,01

5 Market Securities Exchange Company Pvt. Limited 01-4248973

6 Agrawal Securities Pvt. Limited 01-4168057

6_RWS Agrawal Securities Pvt. Limited 021-531667

7 J.F. Securities Company Pvt. Limited 01-4256099

7_RWS J.F. Securities Company Pvt. Limited 071-540737

8 Ashutosh Brokerage & Securities Pvt. Limited 01-4220276

10 Pragyan Securities Pvt. Limited 01-6226890

10_RWS Pragyan Securities Pvt. Limited 021-527283

11 Malla & Malla Stock Broking Company Pvt. Limited 01-4432088

13 Thrive Brokerage House Pvt. Limited 01-4419051

31
13_RWS Thrive Brokerage House Pvt. Limited 061-526877

14 Nepal Stock House Pvt. Limited 01-4265888

14_RWS Nepal Stock House Pvt. Limited 061-536258

16 Primo Securities Pvt. Limited 01-4168164

17 ABC Securities Pvt. Limited 01-4230787

18 Sagarmatha Securities Pvt. Limited 01-4439315

19 Nepal Investment & Securities Trading Pvt. Limited 01-4495450

19_RWS Nepal Investment & Securities Trading Pvt. Limited 021-440127

20 Sipla Securities Pvt. Limited 01-4255782

21 Midas Stock Broking Company Pvt. Limited 01-4240089

22 Siprabi Securities Pvt. Limited 01-5530701

22_RWS Siprabi Securities Pvt. Limited 051-523818

25 Sweta Securities Pvt. Limited 01-4444791

26 Asian Securities Pvt. Limited 01-4424351

32
28 Shree Krishna Securities Limited 01-4224262

29 Trishul Securities And Investment Limited 01-4440709

29_RWS Trishul Securities And Investment Limited 056-528426

32 Premier Securites Company Limited 01-4231339

32_RWS Premier Securites Company Limited 061-534201

33 Dakshinkali Investment and Securities Pvt. Ltd. 01-4168640

34 Vision Securities Pvt. Ltd. 01-4438621

35 Kohinoor Investment and Securites Pvt. Ltd. 01-4442857

36 Secured Securities Ltd. 01-4168172

37 Swarnalaxmi Securities Pvt. Ltd. 01-4417178

38 Dipshikha Dhitopatra Karobar Co. Pvt. Ltd. 01-4102532

39 Sumeru Securities Pvt. Ltd. 01-4444740

40 Creative Securities Pvt. Ltd. 01-4168205

41 Linch Stock Market Ltd. 01-4469367

42 Sani Securities Co. Ltd. 01-401006

33
43 South Asian Bulls Pvt. Ltd. 01-4284785

44 Dynamic Money Managers Securities Pvt. Ltd.

45 Imperial Securities Co. Pvt. Ltd. 01-4231004

46 Kalika Securities Pvt. Ltd. 01-4430601

47 Neev Securities Pvt. Ltd. 01-4168601, 01-416

48 Trishakti Securities Public Limited 01-4232132

49 Online Securities Pvt. Ltd. 01-4246390

50 Crystal Kanchanjungha Securities Pvt. Ltd. 01-4422376

51 Oxford Securities Pvt. Ltd. 01-4273850

52 Sundhara Securities Ltd. 01-4212215

56 Sri Hari Securities Pvt. Ltd. 01-4437562

53 Investment Management Nepal Pvt. Ltd. 01-4256589

54 Sewa Securities Pvt. Ltd. 01-4256642

55 Bhrikuti Stock Broking Co. Pvt. Ltd. 01-4223466

57 Arya Tara Investment And Securities Pvt. Ltd. 01-5705596

34
58 Naasa Securities Co. Ltd. 01-4440385

59 Deevyaa Securities & Stock House Pvt. Ltd 01-4421488

35