NEPSE publishes list of companies eligible for margin trading

KATHMANDU, JANUARY 29: The Nepal Stock Exchange (NEPSE), the country's only stock exchange for the secondary market, has published a list of companies whose securities are eligible for margin trading. Yesterday,  the NEPSE released the names of 102 companies that meet the eligibility criteria for margin trading. According to it, there are currently 244 listed companies, of which only 202 qualify for margin trading.

As per Section 8 of Chapter 3 the Margin Trading Facility Procedure, 2075 BS, only the securities of companies that fulfil the specified criteria are deemed eligible for margin trading. Additionally, securities brokers offering margin trading services are authorized to provide this facility solely for the securities of companies approved by NEPSE.

To be eligible for margin trading, a company must meet several key conditions set by NEPSE. The company should have a minimum of 10,000 shareholders, and its net assets must not be lower than its paid-up capital. Similarly, it must have distributed at least 10 per cent dividends in the last two fiscal years and, completed its annual general meeting within the first six months of the fiscal year.

Furthermore, the company’s shares must have been traded on at least 80 percent of trading days in the secondary market during the previous fiscal year. 

NEPSE is required to publish a list of margin-trading-eligible securities for each fiscal year and update it within seven months after the fiscal year's end. If a company is removed from the updated list, any margin trading facility previously granted to it must be settled within three working days.

Among the 19 listed commercial banks, three—Prabhu Bank, Laxmi Sunrise Bank, and Prime Commercial Bank—have failed to meet the eligibility criteria for margin trading. In the finance sector, only ICFC Finance has been deemed eligible. In the development bank category, six companies qualify, while in the microfinance sector, 34 companies have been approved.

The insurance sector includes nine life insurance and nine non-life insurance companies that meet the eligibility standards. Furthermore, the list comprises four investment companies, four manufacturing and processing companies, 15 hydropower companies, two hotel and tourism companies, and two companies from other sectors.

Despite the publication of the list, brokerage firms have yet to initiate the provision of margin trading services.