Kathmandu. It will be mandatory for the investors to open a separate account in the broker to avail margin trading facility. This means that the current investor’s account will not be able to avail margin trading facility in the broker.
The preliminary draft of the ‘Margin Trading Facility Directive-2082’ prepared by the Securities Board of Nepal (SEBON) has proposed that the investors should open a separate account in broker for margin trading.
In the proposed draft, it has been proposed that the investors who get margin trading facility will have to open a separate margin trading account and margin trading beneficiary account through a broker. It has also been proposed in the draft that brokers should open margin transactions in CDSC for the purpose of RAFSA.
In addition, the draft has proposed to link the margin trading account of margin investors with the margin transaction account opened through brokers and the margin transaction of the margin member with the RAFSAF beneficiary account. It has also been proposed in the draft that while providing margin trading facility to the investors, the broker will be given the right to take the margin trading account and the margin transaction beneficiary account under the authority warrant.
If the investor fails to repay the amount taken for margin trading facility or fails to maintain the maintenance margin, the broker should use the authorized warrant only for the purpose of selling or clearing the shares. The details of the works carried out in this regard should also be reported to the Nepal Stock Exchange (NEPSE).
Similarly, the proposed draft has also paved the way for eliminating the need for margin trading account only if the Securities Board of Nepal (SEBON) is in a position to provide margin trading facility from the investor’s trading account.
In the proposed draft, the Securities Board of Nepal (SEBON) has made a provision that brokers should identify the shares purchased under the margin trading facility on a daily basis or after the transaction or at the time of settlement.
