Capital Market

Bachelor of Business Management (BBM)

Compile By: Achyut Raj Pyakurel, MBA

Syllabus
Financial market
Financial market
Role and Functions of
Capital Markets

Note:
• Newly issued equities might be the IPO, FPO, Private Placement, Right
issue and Preferred stock.
• Mean while secondary market may further subdivided as OTC market and
Auction Marker (Organized Exchange Market)
 Role and Functions of
Capital Markets
Capital Market

• Capital market is a market for long-term securities that includes both debt and equity. Companies
and governments can raise long term funds (more than a year) through this market. The capital
market connects the surplus units with the deficit units. It means that the funds are channelized from
those who have excess capital to those who need it.

• Funds are raised by issuing capital market instruments like stocks and bonds. These instruments
have a higher risk than money market instruments.

• However, at the same time, these instruments generate higher returns. These markets are strictly
regulated in order to avoid any fraudulent practices.

• The Securities Board of Nepal regulates the capital or securities market in the Nepal
• Role and Functions:
• Savings Mobilization
• Formation of Capital
• Rapid Economic Growth
• Benefits to Investors
• Variety of Services
• Liquidity of Funds
Role and Functions of
Capital Markets
• Saving Mobilization
• Capital market acts as a link between savers and entrepreneurial borrowers. It
transfers money from savers (households) to entrepreneurial borrowers
(companies who need capital). This way these markets mobilize savings in an
economy and divert them into productive investment. Productive usage of
funds paves the way for economic growth and prosperity.
• Formation of Capital
• Capital formation is the process of increasing the stock of real capital. It
includes the creation of capital goods like factories, machinery, tools,
equipment and so on. These capital goods are utilized for the production of
other goods. Savings are mobilized through the capital market to various
sectors such as the agricultural sector, industrial sector, etc in an optimal
manner. Optimal allocation increases the rate of capital formation in an
economy
• Rapid Economic Growth
• The allocation of capital is done optimally, for better utilization of scarce
resources. Improvement in capital goods increases the efficiency of labor.
Superior and technologically advanced capital goods increase overall
productivity. This increased productivity enhances economic growth.
Role and Functions of
Capital Markets
• Benefits to Investors
• In the capital market, investors are provided with an avenue for long-term investments.
Most importantly, investors are offered a wide variety of instruments like bonds, mutual
funds, insurance policies, equities, etc. This enables investors to diversify and
channelize their savings into the most profitable avenues. To protect investors from any
unscrupulous activities, these markets are strictly regulated

• Variety of Services
• The capital market provides a wide array of services. Services such as underwriting,
export finance, consultancy, merchant banking, credit rating etc. are offered to investors.

• Liquidity of Funds
• In this market, funds are available for long term investments. Because of organized
stock and other exchanges, both security sellers and buyers are readily available. This
makes the capital market a liquid market as funds are available continuously.
Key Players
Nepalese capital market
Key Players
Nepalese capital market
• Issuer
• Government, public companies

• Stock Exchange
• Nepal Stock Exchange ( NEPSE)

• Merchant Bankers

•
• Investor-
• general public, mutual funds, business person

• Market Regulators
• SEBON
• NRB
• NEPSE
• Depository
• CDS and Clearing Limited
• Depository Participants

• Stock Brokers
• 50 brokers house
Central Banking and
Capital Markets
• “A Central Bank is the bank in any country to which has
been entrusted the duty of regulating the volume of
currency and credit in that country”-Bank of
International Settlement.
• Capital market is a market for long-term securities that includes
both debt and equity. Companies and governments can raise long
term funds (more than a year) through this market. The capital
market connects the surplus units with the deficit units. It means
that the funds are channelized from those who have excess capital
to those who need it.
Role of central bank in
capital market
• Money supply/Liquidity
• CRR,SLR,CCD
• Credit control
• Credit rationing
• Margin lending
• Financial stability
• Inflation
• Forex regulation
SEBON and Regulation of Securities Markets
• Securities Board of Nepal (SEBON) was established by the
Government of Nepal on June 7, 1993 as an apex regulator of Securities
Markets. It has been regulating the market under the Securities Act,
2006.

• The Governing Board of SEBON is composed of seven members

including one full time chairman appointed by the Government for tenure
of four years.

• Other members of the Board include

• joint secretary of Ministry of Finance,
• joint secretary of Ministry of Law, Justice and Parliamentary Affairs,
• representative from Nepal Rastra Bank,
• representative from Institute of Chartered Accountants of Nepal,
• representative from Federation of Nepalese Chambers of Commerce and
Industries, and
• one member appointed by the Government from amongst the experts
pertaining to management of securities market, development of capital
market, financial or economic sector.
SEBON and Regulation of Securities Markets

• Act
• Regulations
• Bylaws
• Guidelines
• Circulars
ACTS
1 Asset (Money) Laundering Prevention Act, 2008
2 Securities Act, 2063
3 Commodities Act, 2074

Regulations
1 धधतोऩत्र दतता तथत ननस्कतशन ननयमतवऱी २०७३ (चौथो सॊशोधन सहहत )
2 Specialized Investment Fund Regulation , 2075
3 सतमहू हक ऱगतनी कोष ननयमतवऱी, २०६७ (चौथो सॊशोधन सहहत )
4 धधतोऩत्र व्यवसतयी (मचेन्ट फैंकर) ननयमतवऱी २०६४ (दोश्रो सॊशोधन सहहत )
5 Securities listing and Trading Regulation, 2075
6 Commodities Exchange Market Rules , 2074
7 Credit Rating Regulation, 2068
8 Central Depository Service Regulation, 2067 (2010)
9 Stock Exchange Operation Regulation, 2064
10 Securities Board Regulation, 2064
SEBON and Regulation of Securities Markets
Bylaws
धधतोऩत्र कतरोवतर रतपसतप तथत पछ्र्यौट ववननयमतवऱी, २०६९ (चौथो सॊशोधन सहहत )
1

2 धधतोऩत्र केन्द्न्िय ननऺेऩ सेवत ववननयमतवऱी ,२०६८ (छै ठौ सॊशोधन सहहत )

3 धधतोऩत्र कतरोवतर सञ्चतऱन ववननयमतवऱी, २०७५
4 धधतोऩत्र सूचीकरण ववननयमतवऱी, २०७५
6 Government Securities Transaction Bylaws of NEPSE, 2062
7 Government Securities Bylaws of SEBON, 2062

Guidelines
1 मतन्द्जन
ा कतरोफतर सुववधत सम्फन्धी ननदे शन, २०७४
2 फुक ववन्द्डडङ्ग ननदे शशकत, २०७७
3 धधतोऩत्रको सतवाजननक ननष्कतशनको केन्िीकृत ववद्युतीय सेवत कतया सॊचतऱन ननदे शशकत, २०७४
4 (मचेन्ट फैंकर) ऱे रतख्नऩ
ु ने वववरणहरु र ऩेश गनुा ऩने प्रनतवेदनहरुको ढतॉचत
5 नेऩतऱ धधतोऩत्र फोडा सूचनत प्रववधध नीनत, २०७६
6 सम्ऩत्ती शुद्धीकरण तथत आतङ्कवतदी क्रियतकऱतऩमत ववत्तीय ऱगतनी ननवतरण सम्फन्धी ननदे शन, २०७६
7 सूचीकत सॊगहठत सॊस्थतहरुको सॊस्थतगत सुशतसन सम्फन्धी ननदे शशकत २०७४
ृ
8 धधतोऩत्र खररद ( सतफाजननक ननष्कतशन) सम्फन्धी ननदे शशकत , २०७३
9 Securities Issuance and Allotment Guideline
10 Portfolio Management Guidelines, 2067 (2010)
11 Compliance Guidelines for Securities Broker, 2058
12 Mutual Fund Guidelines-2069 (applicable from 2069-04-01)
 Public Issue of Securities - IPO's Procedures

• kl/R5]b–@ lwtf]kq btf{ ;DaGwL Joj:yf

• lwtf]kq btf{ u/fpg lgj]bg lbg' kg]{ M

• -!_ P]gsf] bkmf @& sf] k|of]hgsf] nflu lwtf]kq btf{ u/fpg] ;+ul7t ;+:yfn] cg';"rL–!
adf]lhdsf] 9fFrfdf af]8{ ;dIf lgj]bg lbg' kg]5
{ .

• -@_ pklgod -!_ adf]lhdsf] lgj]bg;fy cg';"rL–@ df plNnlvt lgj]bg b:t'/ afktsf] /sd
af]8{sf] vftfdf hDdf u/]sf] a}+s ef}r/ tyf To:tf] ;+ul7t ;+:yfsf] clVtof/ k|fKt clwsf/Ln]
k|dfl0ft u/]sf] b]xfosf ljj/0f tyf sfuhft ;d]t ;+nUg ug'{ kg]5
{ M–
• -s_ sDkgL ;DaGwL k|rlnt sfg"g adf]lhd ;+:yflkt ;+ul7t ;+:yf eP ;f] ;+ul7t ;+:yfsf] cBfjlws
k|aGwkq / lgodfjnL,
• -v_ ljz]if P]gåf/f ;+:yflkt ;+ul7t ;+:yf eP ;f] ;+ul7t ;+:yf ;~rfng ;DaGwL lgod jf ljlgod,
• -u_ ;+ul7t ;+:yfsf] ;~rfns ;ldltaf6 lwtf]kq btf{ u/fpg] ;DaGwdf ePsf] lg0f{osf] k|ltlnlk,
• -3_ ;+ul7t ;+:yfsf] ;~rfns ;ldltn] lwtf]kq btf{ u/fpg] ;DaGwdf lbPsf] clVtof/L,
• -ª_ ;+ul7t ;+:yfsf] kl5Nnf] cfly{s jif{sf] n]vfk/LIf0f ePsf] ljQLo ljj/0f,
Public Issue of Securities - IPO's Procedures

• lwtf]kqsf] laqmL jf afF8kmfF8 ;DaGwL hfgsf/L lbg' kg]{M

• -!_ P]gsf] bkmf @* sf] pkbkmf -!_ df plNnlvt cjlw leq ;+ul7t ;+:yfn]
o; lgodfjnL adf]lhd btf{ ePsf] lwtf]kqsf] laqmL ljt/0f jf afF8kmfF8 u/]sf]
hfgsf/L af]8n{ fO{ lbg' kg]{5 .
• -@_ pklgod -!_ adf]lhd af]8n { fO{ hfgsf/L u/fpFbf b]xfosf] ljj/0f v'nfpg'
kg]{5 M–
• -s_ lwtf]kq laqmL ljt/0f jf afF8kmfF8 ePsf] ldlt,
• -v_ laqmL ljt/0f jf afF8kmfF8 ul/Psf] lwtf]kqsf] lsl;d / ;+Vof,
• -u_ lwtf]kq laqmL ljt/0f jf afF8kmfF8 ul/Psf] tl/sf,
• -3_ lwtf]kq v/Lb ug]{ jf k|fKt ug]{ z]o/wgLsf] gfd / 7]ufgf,
• -ª_ lwtf]kq laqmL ljt/0f jf afF8kmfF8 ubf{ k|fKt ePsf] /sd .
Public Issue of Securities - IPO's Procedures

• kl/R5]b–# lwtf]kqsf] ;fj{hlgs lgisfzg ;DaGwL Joj:yf

• lwtf]kqsf] ;fj{hlgs lgisfzg ug'{ kg]{ M -!_ ;DalGwt lgofds lgsfon] cGoyf tf]s]sf]df afx]s
;+ul7t ;+:yfsf] hf/L k"FhLsf] bz k|ltzt eGbf 36L / pgGrf; k|ltzt eGbf a9L gx'g] u/L z]o/sf]
k|f/lDes ;fj{hlgs lgisfzg -Olglzon klAns ckml/ª_ ug'{ kg]5
{ .

• -@s_ k|f/lDes ;fj{hlgs lgisfzg ug{ rfxg] ;+ul7t ;+:yfsf] ;~rfns tyf Ps k|ltzt jf ;f] eGbf
a9L z]o/ :jfldTj /x]sf z]o/wgL shf{ ;"rgf s]Gb|sf] sfnf] ;"rLdf g/x]sf] x'g' kg]5
{ .

• -#_ a}l+ sª, ljQLo jf aLdf ;DaGwL Joj;fo ug]{ ;+ul7t ;+:yf afx]ssf cGo ;+ul7t ;+:yfn] pklgod -
!_ adf]lhd lwtf]kqsf] ;fj{hlgs lgisfzg ubf{ b]xfosf zt{x? k"/f u/]sf] x'g' kg]5
{ M– 4 –

• s_ klAns sDkgLsf] ?kdf cfkm\gf] p2]Zo cg';f/ sf/f]af/ ;~rfng ug{sf nflu cfjZos sfo{x? cufl8
a9fO{ k"/f Ps cfly{s jif{sf] cjlw k"/f u/]sf],
• -v_ k|rlnt sfg"g adf]lhd n]vfk/LIf0f tyf ;fwf/0f;ef ;DkGg u/]sf],
• -u_ cfkm\gf] p2]Zo cg';f/ sf/f]af/ ;~rfng ug{sf nflu k|rlnt sfg"g adf]lhd s'g} lgsfoaf6 Ohfht,
cg'dlt jf :jLs[lt lng'kg]{ ePdf To:tf] Ohfht, cg'dlt jf :jLs[lt lnO;s]sf],
Public Issue of Securities - IPO's Procedures

• -3_ ;+ul7t ;+:yfsf] nflu cfjZos kg]{ hUuf v/Lb jf cGo k|sf/n] Joj:yf u/L
sf/vfgf ejg, sfof{no ejg, uf]bfd3/ tyf cGo cfjZos ;'ljwfx?sf] lgdf{0f sfo{
z'? ul/;s]sf],

• -ª_ pTkfbgsf] k|ljlw 5gf}6 u/L pBf]usf] nflu cfjZos kg]{ oflGqs pks/0f tyf
To;sf kf6{k"hf{ cflb v/Lb ug'{kg]{ ePdf 6]08/ cflb u/L v/Lb k|s[of cufl8 a9fO{
;s]sf],

• -r_ lwtf]kqsf] ;fj{hlgs lgisfzg ;DaGwdf lgisfzg tyf laqmL k|aGws;Fu ;Demf}tf
eO;s]sf],

• -5_ cfof]hgfsf] lgdf{0f cjlwe/ sDkgLsf] C0f / k"FhLsf] cg'kft lgb]{lzsfdf tf]lsPsf]
cg'kftdf /fVg ;xdt ePsf],

• -h_ ;+:yfksx?n] lng sa'n u/]sf] lwtf]kqsf] /sd zt k|ltzt r'Qmf e};s]sf],
Public Issue of Securities - IPO's Procedures
• -em_ kl/of]hgf lgdf{0fsf nflu kmfOgflG;on Snf]h/ (financial closure) e};s]sf],
• -`_ hnljB't pTkfbg ;+:yf ePdf, ljB't v/Lb ;Demf}tf ul/;s]sf],
• -6_ ;j{;fwf/0fsf nflu lgisfzg ug{ nfu]sf] z]o/x? lgb]{lzsfdf tf]lsP adf]lhd k|Tofe"lt u/fPsf] .

-$_ ;+ul7t ;+:yfn] cfkm\gf] hf/L k"FhLsf] bz k|ltzt;Ddsf] z]o/ pBf]u jf cfof]hgf k|efljt If]qsf jfl;Gbfx?nfO{ laqmL
ljt/0f ug{sf] nflu 5'6\ofpg ;Sg]5

(v= /]l6Ë u/fpg' kg]{ M

-!_ ;+ul7t ;+:yfn] lwtf]kqsf] ;fj{hlgs lgisfzg ug'{ k"j{ qm]l86 /]l6Ë ;+:yfdfkm{t ;f] ;+ul7t
;+:yfsf] /]l6Ë u/fpg' kg]{5 .

;fj{hlgs lgisfzg v'nf /xg] cjlwM

-!_ P]g tyf o; lgodfjnL adf]lhd ;fj{hlgs lgisfzg ul/g] lwtf]kqsf] b/vf:t v'nf /xg] cjlw sDtLdf rf/
sfo{ lbg x'g]5 .

-@_ pklgod -!_ adf]lhdsf] cjlwleq lgisfzg ul/Psf] ;a} lwtf]kq laqmL gePdf ;+ul7t ;+:yfn] To:tf]
b/vf:t v'Nnf ePsf] ldltn] a9Ldf kGw| lbgsf nflu lwtf]kqsf] b/vf:t v'Nnf /fVg ;Sg]5 / ;f]sf]
hfgsf/L af]8{nfO{ lbg' kg]{5 .

-#_ pklgod -!_ / -@_ df h'g;'s} s'/f n]lvPsf] ePtfklg k|efljt If]qsf afl;GbfnfO{ lgisfzg u/]sf]
z]o/ sDtLdf kGw| lbg / a9Ldf tL; lbg v'nf /fVg' kg]{5 .
Public Issue of Securities- FPOs Procedures
• lwtf]kqsf] yk ;fj{hlgs lgisfzg ;DaGwL Joj:yfM
• -!_ lwtf]kqsf] k|f/lDes ;fj{hlgs lgisfzg u/L ;"rLs/0f e};s]sf] ;+ul7t ;+:yfn]
cfkm\gf] k"FhL a[l4 ug'{ k/]df lwtf]kqsf] yk ;fj{hlgs lgisfzg -kmb{/ klAns O:o"_ ug{
;Sg]5 .
• -@_ pklgod -!_ adf]lhd lwtf]kqsf] yk ;fj{hlgs lgisfzg ug{ b]xfosf] zt{ k'/f ug{'
kg{5
] M—
• -s_ ljut kfFr aif{df sDtLdf kl5Nnf] tLgaif{ v'b d'gfkmfdf ;~rfng eO{ k|ltz]o/
g]6jy{ k|ltz]o/ r'Qmf kF"hL eGbf a9L ePsf],
• -v_ ;+ul7t ;+:yfsf] lwtf]kqsf] ;fj{hlgs lgisfzg ePsf] tLg jif{ k"/f ePsf],
• -u_ lwtf]kqsf] yk ;fj{hlgs lgisfzg ug]{ ;DaGwdf jflif{s ;fwf/0f ;efaf6 k|:tfj
kfl/t ePsf],
• -3_ c+lst d"No eGbf a9L d"No tf]sL lgisfzg ug]{ ePdf d"No lgwf{/0f ul/Psf] ljlw /
;f]sf] cf}lrTo k'li6 ug]{ cfwf/ pNn]v ePsf] .

;+ul7t ;+:yfn] o; lgod adf]lhd lwtf]kqsf] yk ;fj{hlgs lgisfzg ubf{ lgod!#

adf]lhd :jLs[tL lnO{ ljj/0fkq k|sfzg ug'{ kg]5
{ .
Public Issue of Securities- IPO’s & FPOs Procedures

lk|ldoddf lwtf]kq lgisfzg ug{ ;Sg]M

• ;+ul7t ;+:yfn] b]xfosf] zt{sf] cwLgdf /xL lk|ldoddf lwtf]kqsf] ;fj{hlgs
lgisfzg ug{ ;Sg]5M—
• -s_ ;+ul7t ;+:yf nuftf/ kl5Nnf] tLg jif{;Dd v'b d'gfkmfdf ;~rfngdf /x]sf],
• -s!_ ;+ul7t ;+:yfsf] k|lt z]o/ r'Qmf k"FhL eGbf k|lt z]o/ g]6jy{ a9L ePsf],
• -s@_ ;+ul7t ;+:yfsf] ;fwf/0f ;efn] lk|ldod d"Nodf lwtf]kq hf/L ug]{ lg0f{o u/]sf],
21
• -v_ ;+ul7t ;+:yfn] lk|ldod d"No lgwf{/0f ubf{ ckgfO{Psf] lalw, cf}lrTo /
cf}lrTonfO{ k'li6 ug]{ u/L ;+ul7t ;+:yf eGbf aflx/sf lj1 jf lj1 ;+:yfaf6
k|dfl0ft lwtf]kq d"Nof+sg k|ltj]bg,
• -u_ lgb]{lzsfdf plNnlvt lk|ldod lgwf{/0f ;DaGwL Joj:yf kfngf u/]sf] .
• -3_ ;+ul7t ;+:yfn] slDtdf cf};t jf ;f] eGbf dflyNnf] qm]l86 /]l6Ësf] u|]8 k|fKt
u/]sf] x'g' kg]{ .
Public Issue of Securities- IPO’s & FPOs Procedures
a's lalN8Ë ljlwaf6 ;fj{hlgs lgisfzg ug{ ;Sg]M

• -!_ b]xfosf of]Uotf k'u]sf ;+ul7t ;+:yfn] a's ljlN8Ë ljlw dfkm{t lwtf]kqsf] k|f/lDes
;fj{hlgs lgisfzg ug{ ;Sg]5M
• -s_ ;+ul7t ;+:yf ljut tLg cfly{s aif{ b]lv nuftf/ v'b d'gfkmfdf ;+rfngdf /x]sf],
• -v_ ;+ul7t ;+:yfsf] ;fwf/0f ;efn] a's ljlN8Ë ljlw dfkm{t lwtf]kq hf/L ug]{ lg0f{o u/]sf],
• -u_ ;+ul7t ;+:yfsf] k|lt z]o/ g]6jy{ k|lt z]o/ r'Qmf k"FhLsf] slDtdf !%) k|ltzt /x]sf],
• -3_ ;+ul7t ;+:yfn] slDtdf cf};t jf ;f] eGbf dflyNnf] qm]l86 /]l6Ësf] u|8] k|fKt u/]sf],

-@_ pklgod -!_ adf]lhdsf] of]Uotf k'u]sf ;+ul7t ;+:yfn] a's ljlN8Ë ljlw dfkm{t lwtf]kqsf]
k|f/lDes ;fj{hlgs lgisfzg ubf{ of]Uo ;+:yfut nufgLstf{af6 vl/b cfzo d"No k|fKt ug'{ kg]5
{ .

-#_ ;+ul7t ;+:yfn] pklgod -@_ adf]lhd k|fKt ePsf] vl/b cfzo d"Nosf] cfwf/df lwtf]kqsf]
laqmL d"No ;Ldf lgwf{/0f u/L of]Uo ;+:yfut nufgLstf{nfO{ lgisflzt lwtf]kqsf] $) k|ltzt /
;j{;fwf/0f nufgLstf{sf] nflu ^) k|ltzt lwtf]kq lgisfzg ug'{ kg]5
{ .

-$_ ;+ul7t ;+:yfn] pklgod -#_ adf]lhd of]Uo ;+:yfut nufgLstf{nfO{ lgisfzg u/]sf] lwtf]kq
lwtf]kq ahf/df ;"lrs/0f ePsf] ldltn] 5 dlxgf ;Dd laqmL jf x:tfGt/0f ug{ ;Sg] 5}g .
Public Issue of Securities- IPO’s & FPOs Procedures
-%_ o; lgod adf]lhd a's ljlN8Ë ljlw dfkm{t lgisflzt lwtf]kq vl/b ug{]
of]Uo ;+:yfut nufgLstf{sf] ?kdf af]8{af6 :jLs[lt k|fKt u/]sf b]xfosf
;+:yfut nufgLstf{ ;xeflu x'g ;Sg]5g\M
-s_ ;"lrs[t ;+ul7t ;+:yf,
-v_ ljz]if P]g åf/f :yflkt ljQLo ;+:yf,
-u_ ;fd"lxs nufgL sf]if Joj:yfks,
-3_ ;fd"lxs nufgL sf]ifsf of]hgf,
-ª_ dr]{G6 a}+s/, -r_ dfGotf k|fKt cjsfz sf]if,
-5_ af]8{n] ;do ;dodf tf]ss ] f cGo sf]if jf sDkgL jf ;+:yf .
-^_ a's ljlN8Ë ljlw dfkm{t lwtf]kqsf] k|f/lDes ;fj{hlgs lgisfzg ;DaGwL
cGo Joj:yf af]8{n] lgb]{lzsfdf tf]s] adf]lhd x'g]5 .
 Securities Trading Procedure
• sf/f]jf/ ;~rfng M -!_ nufgLstf{sf] cfb]z sfof{Gjgosf nflu sf/f]af/ k|0ffnLdf sf/f]af/ ;q / ;do b]xfo adf]lhd x'g]5M– -
• s_ k|f/lDes sf/f]jf/ M laxfg !)M#) b]lv !!M)) ah];Dd
• -v_ af]nsaf]n / lg/Gt/ sf/f]jf/ M dWofGx !!=)) b]lv #=)) ah];Dd
• -u_ clGtd sf/f]jf/ M ck/fGx #=)) b]lv #=)% ah];Dd

• -@_ pkljlgod -!_ adf]lhdsf] sf/f]af/sf] ;do / ;qdf af]8n { fO{ hfgsf/L lbO{ cfjZostfg';f/ g]K;]n] x]/k]m/ ug{ ;Sg]5 . o;/L sf/f]af/sf] ;do / ;qdf
x]/k]m/ ul/Pdf g]K;]n] ;f] ;DaGwL ;"rgf ;fj{hlgs ?kdf k|sfzg ug'{ kg]{5 .

• -#_ pkljlgod -!_ sf] v08 -s_ adf]lhdsf] k|f/lDes sf/f]jf/ ;qdf lwtf]kqsf] cfb]z k|lali6 dfq ug{ ;lsg]5 .

• -$_ pkljlgod -!_ sf] v08 -s_ adf]lhdsf] ;dodf ul/Psf] cfb]zsf] k|lai6LnfO{ Osf]glds c8/ SjflG66L tyf Osf]glds c8{/ k|fO;sf] cfwf/df v08 -v_
adf]lhdsf] ;do z'?x'g' l7s cl3 sfof{Gjog ul/g]5 . :kli6s/0fM æOsf]glds c8/ SjflG66L tyf Osf]glds c8{/ k|fO;Æ eGgfn] lgwf{l/t ;do leq k|lji6
ePsf vl/b / laqmL cfb]znfO{ u0fgf u/L dfu / cfk"lt{sf] l;4fGt adf]lhd d"No lgwf{/0f ul/ k|ljli6 ePsf ;Dk"0f{ cfb]zx?nfO{ Ps}k6s sfof{Gjog ug]{
k|0ffnL ;Demg' k5{ .

• -%_ ljlgod -!_ sf] v08 -v_ adf]lhdsf] af]nsaf]n / lg/Gt/ sf/f]jf/ ;qdf d"No ;do k|fyldstfsf cfwf/df vl/b jf laqmLsf] cfb]z sfof{Gjog ul/g]5 .

• -^_ ljlgod -!_ sf] v08 -v_ adf]lhdsf] ;qdf sf/f]af/ ubf{ ;b:on] cfb]z adf]lhd lwtf]kqsf] d"No tyf ;+Vof kl/jt{g ug{ ;Sg]5 .

• -&_ ljlgod -!_ sf] v08 -u_ adf]lhdsf] clGtd sf/f]jf/ ;qdf cf};t d"Nodf sf/f]jf/ x'g]5 . cf};t u0fgfsf nflu g]K;]n] ;do tyf sf/f]jf/ ;+Vof tf]Sg
;Sg]5 .

• -*_ ljlgod -!_ sf] v08 -v_ / -u_ adf]lhdsf] ;qdf ;~rfng ePsf sf/f]af/sf] ljj/0f g]K;]n] j]e;fO6 dfkm{t sf/f]af/ eO/x]sf] ;do -l/on 6fOd_ df g}
;fj{hlgs ug]{5 .

• -(_ g]K;]sf] :jLs[ltdf sf/f]jf/ k|0ffnL eGbf aflx/ sf/f]af/ ePsf] tyf 5'§} d"No sfod ePsf]df To:tf] sf/f]af/nfO{ sf/f]jf/ ;b:o dfkm{t g]K;]sf] sf/f]jf/
k|0ffnLdf k|lji6L u/L sf/f]jf/sf] clen]v ug'{ kg]{ ePdf 5'§} sf/f]jf/ ;q ;+rfng ug{ ;lsg]5 .
Securities Trading Procedure

• ;ls{6 a|]s/ M -!_ lg/Gt/ sf/f]af/ z'? x'Fbf sfod /x]sf] g]K;] kl/;"rs b]xfo
adf]lhd 36a9 ePdf b]xfo adf]lhd sf/f]af/df ;ls{6 a|]s/ nufOg]5 M–
• -s_ lg/Gt/ sf/f]jf/ z'? ePsf] Ps 306fleq g]K;] kl/;"rs tLg k|ltztn] 36L jf
a9L ePdf kGw| ldg]6sf nflu,
• -v_ lg/Gt/ sf/f]jf/ z'? ePsf] b'O{ 306f leq g]K;] kl/;"rs rf/ k|ltztn] 36L jf
a9L ePdf tL; ldg]6sf nflu,
• -u_ lg/Gt/ sf/f]jf/ z'? ePsf] s'g} klg ;dodf g]K;] kl/;"rs kfFr k|ltztn] 36L
jf a9L ePdf ;f] kZrft ;f] lbgsf] sf/f]af/ aGb ug]{,
• -@_ s'g} ;+ul7t ;+:yfsf] k|f/lDes sf/f]af/ ;qdf sfod ePsf] lwtf]kqsf]
d"Nodf bz k|ltzt eGbf 36L jf a9L x'g] u/L ;f] lbg sf/f]jf/ x'g] 5}g\.
• -#_ pkljlgod -!_ / -@_ df plNnlvt ;ls{6 a|]s/ ;DaGwL Joj:yfdf af]8n { fO{
hfgsf/L lbO{ g]K;]n] ;do ;dodf x]/km]/ ug{ ;Sg]5 .
Role of stockbroker

A stockbroker is a regulated representative of the financial market who enables

the buying and selling of securities on behalf of financial institutions, investor
clients, and firms. A stockbroker is also called a registered representative or a
broker. The trading or purchase or sale of stocks on the national stock exchanges
are usually executed through a stockbroker.
Contd.
• Take and Execute stock Orders
• Investment Advisory
• Stockbrokers handle transactions for both institutional
and retail customers.
• The primary job of a stockbroker is to obtain buy and sell
orders and execute them.
• Many market participants depend on stockbrokers’
knowledge and expertise regarding the dynamics of the
market to invest in securities.
• A stockbroker can work either individually or with a
brokerage firm. Sometimes, broker-dealers and brokerage
firms are also called stockbrokers.
Major securities indicators

• Primary market
• Ipo
• Right
• Debenture
• Bonus share
• Secondary market
• NEPSE Index
• Market Turnover
• Sector wise Turnover
• Market Capitalization
• Sector wise Market
Capitalization
Contd.
• The NEPSE index is the composite value of all securities listed
in Nepal Stock Exchange (NEPSE).However apart from the
NEPSE index itself, there are other indices in the NEPSE
index family that provide valuable information to the
investors. These indices are:
• NEPSE index
• Sensitive index
• Float index
• Float sensitive index
• Sub-indices
• Each of index listed above are calculated on the basis of value
weighted method. So, index = (Market capitalization of all
shares/Base market capitalization)*100. The base market
capitalization is different for each index based the date of
commencement.
Contd.
NEPSE index:
• NEPSE index is the head of Nepal Stock Exchange's index family. The history of NEPSE
index goes back to the establishment of NEPSE itself i.e. on February 12th, 1994.

• The NEPSE index takes the market price of all the listed shares and the changes in their
prices is reflected in the index. Mathematically,
• NEPSE index = (Total market capitalization/Base market capitalization)*100

• However, a serious disease looms the index calculation technique. While calculating the total
market capitalization the number of total listed shares is multiplied with the current market
price and this paints an inaccurate figure because the total listed shares include the promoter
shares too and the price that is used as a multiplier is the price of the ordinary share.

• For example; the market price of Nepal Telecom (NTC) is Rs 703 today and therefore the
market capitalization of NTC will be total shares listed multiplied by Rs 703. However,
approximately 91% of NTC's shares are of promoter category (owned by government) which
is not being traded in the market and therefore won't be prices at Rs 703. Now, you can see if
the figure that we get is a realistic one.

• As of June 27, 2019 the total market capitalization was Rs 1,564,430.79 million whereas the
Float Market Capitalization stood at Rs. 548,355.89 million, which is only 35% of the total
market capitalization. Thus the index that we are seeing, may not sufficiently portray the
market behavior.
Contd.
Sensitive Index:
• The sensitive index was introduced by NEPSE from January 01, 2007
and that date marks the base market capitalization. Unlike NEPSE
index, the sensitive index considers only selected companies. These
companies are taken if they fulfill the following criteria:

• Minimum paid-up capital of Rs 2 crore

• More than 1000 ordinary shareholders
• At least three consecutive years of profitability
• Book value of share higher than its par values
• Publication of annual report within 6 months of completion of the
fiscal year

• Thus the companies fulfilling these criteria will be considered while

calculating the sensitive index. The sensitive index is particularly
important because it shows the movement in high performing stocks of
the market.
Contd.
Float index:
• Float, in stock market, refers to the number of shares that are being actively traded. The
investors need to know the float status of a stock market because it shows the actual supply
of any share in the market.

• In case of Nepal, all the companies have promoter as well as public shares and both of them
are listed in NEPSE. However, despite being listed the promoter shares are rarely traded
with some exceptions. Even in case of public/ordinary shares, most investors tend to hold
the shares for a longer term and that declines the float of share market.

• The NEPSE hasn't identified mechanism to determine the float in public shares yet, therefore
the float index takes the ordinary shares of all listed companies to determine its index value.
NEPSE had introduced the float index on September 15, 2008 and that is the base market
capitalization date for this index.

Float sensitive index:

• The float sensitive index was introduced on September 15, 2008, same date as the float
index. The float sensitive index takes into account the public/ordinary shares of companies
that are eligible for the sensitive index.

• In many of the large companies that are on the sensitive index lists, the promoter: public
ownership ratio is heavier towards the promoter side. So, the infrequent trading of promoter
shares stabilizes the index more than what is truly happening in the ordinary shares' prices.

• Thus the float sensitive index considers only the ordinary shares of high performing stocks
and helps investors see where the larger companies are heading toward.
Contd.
Sub-indices:
• The sub-indices provide the information regarding each sector that is identified by NEPSE.
The stock market is an information-sensitive market and not all information impact all the
companies in the same way. For example, the outcome of monetary policy has a huge impact
on the share price changes of banks and financial institutions (BFIs), but at the same time it
may not have any impact on manufacturing companies such as Bottler's Nepal.

• Thus, the sub-index of each sector shows the investor how the market is responding towards
the information disseminated. In addition to that the history has shown that in every bull and
bear, there are some distinct sector that pulls or pushes the market and the sub-index can
play a major role in identifying which sector is it.
• The various sub-indices that NEPSE has are:
1. Commercial banks
2. Development banks
3. Finance
4. Life Insurance
5. Non-life insurance
6. Microfinance
7. Mutual fund
8. Manufacturing & processing
9. Others
10. Hotels
11. Hydropower
Investor’s education and awareness in Nepal
• Inadequate financial literacy
• Inadequate fundamentals

• INVESTOR'S AWARENESS PROGRAM

Thank you…