Two foreign bourses propose working terms with Nepse

TWO foreign stock exchange companies — Korea Exchange and Singapore Exchange — have expressed interest in working as a strategic partner with the Nepal Stock Exchange (Nepse). Nepse said it is studying the proposal forwarded by these companies. Korea Exchange’s proposal seeks a 10 percent stake in Nepse. Nepse General Manager Sitaram Thapaliya said they are studying Korea Exchange’s system to know whether it will be compatible in Nepal’s case. Thapaliya, however, declined to provide details on Singapore Exchange, saying they have not yet received a detailed proposal from the company. “If found feasible in the preliminary study, we will hire a consultant and fix the ‘Terms of Reference’ for the selection,” he said, adding they plan to complete the preliminary study and issue a public notice to appoint a consultant by mid September. If a company is selected for strategic partnership, Nepse will receive the system and other technical support, while the company will take a stake in Nepse. Nepse has long been searching for a strategic partner as it has failed in terms of innovation and online trading. The existing system is not compatible even for new instruments like mutual funds, market makers, debt instruments and stock derivatives, among others. Following the government’s decision to divest its shares in Nepse, the latter has been pursuing privatisation for the last four and half years. The Ministry of Finance and the Nepal Rastra Bank have also asked Nepse to find a strategic partner so that the government could divest or transfer its shares. The government holds 58.66 percent in Nepse, while the central bank holds 34.60 percent. After appointing a strategic partner, Nepse plans to adopt a full automation system for stock trading. “Besides, it could also help introduce new products and promote bond trading, which is currently in poor state,” said Thapaliya. India’s software major Infosys recently forwarded a proposal for its stock exchange software. Thapaliya said they are holding consultations with government authorities concerned on whether to initiate talks with prospective strategic partners or purchase the system. “We are waiting a clear government policy.”