Kathmandu. Brokers will be able to sell the shares if the investors who have taken the margin trading facility in the secondary market do not come in contact with the margin call.
This provision has been proposed in the preliminary draft of the ‘Margin Trading Facility Directive, 2082’ to be brought by the Securities Board of Nepal. It has been proposed in the draft that brokers should take a minimum percentage of the average price of the shares of the listed corporate organization within 180 days or the minimum percentage of the market value, whichever is lower, as the initial margin from the investors. When calculating the price of a share, only the average price of the stock should be taken into account for the average price of 180 days or 60% of the market price, whichever is lower.
Similarly, the proposed draft has made a provision for brokers to call margin to investors if they are unable to maintain the maintenance margin required for the shares purchased under margin trading facility due to changes in the market price of shares. In this way, the broker can sell the shares purchased by the investor under the margin trading facility if the required margin is not maintained or is not contacted after the margin call.
After the issuance of the shares, the concerned investors should settle the accounts and inform the Nepal Stock Exchange (NEPSE) about the same. It has also been proposed in this directive that brokers should clearly include provisions related to margin calling and selling in their procedures.
Currently, the Securities Board of India (SEBON) has sought feedback from stakeholders on this directive. This directive will be implemented by the Securities Board incorporating the suggestions received from the stakeholders.
