Nepalese Financial Market

Presented By: Jyoti Upreti Nitesh Khatiwada Ujwala Rijal

Types of Financial Market

On the basis of function

Primary Market

Secondary Market

On the basis of Maturity

Capital Market Money Market

On the basis of function

Primary Market
Market for first issue of securities

Market where corporations raise new capital by

issuing securities Seasoned Market: deals with offering of additional

amount of already existing security

Unseasoned Market: market for initial public offering

On the basis of function

Secondary Market
Market dealing with trading of outstanding securities

Bridge between investors and investors

Organized security exchange: Market where listed securities in SEBON are traded
Example: NEPSE

Over the counter market: Market where non-listed securities are also traded

As per Maturity of Securities

Capital Market
Market dealing with trading of long term securities

Example: all long term securities issued by

corporations and Government

As per Maturity of Securities

Money Market
Market dealing with trading of short-term securities Example: certificate of deposit, promissory notes, bills of exchange etc.

History

Financial Market
History of securities market began with the floatation

of shares by Biratnagar Jute Mills Ltd. and Nepal

Bank Ltd. in 1937 Significant development relating to capital markets :
Introduction of the Company Act 1964 First issuance of Government Bond in 1964 Establishment of Securities Exchange Center Ltd. in 1976

History

Only capital markets institution undertaking the job

of
Brokering Underwriting Managing public issue

Market making for government bonds

Other financial services

History

Operated an over the counter market for company

shares and government bonds Converted Securities Exchange Center into Nepal Stock Exchange in 1993 Shares of various manufacturing, trading and banking companies became listed Nepal Stock Exchange complemented growth of

these financial institutions

History

Securities Exchange Act amended in 1993

Securities Exchange Board established to function as a regulatory body Set the operating guidelines for intermediary functions Commercial banking industry historically performed very well in the capital markets

History

Commercial banks securities accounted for 65% of

the turnover and 36 % of the total amount of public issue in 1994/95 Basic objective of NEPSE
To provide liquidity to government bonds and corporate

securities
To protect investors' rights and develop a secondary market

History

Market Structure of NEPSE

Brokers Association Market Makers Mutual Fund Operations Institutional Investors

History

Introduction of Commodity Exchange Market in

2006 COMEN (Commodity and Metal Exchange Nepal): First commodity market place established since 2006: http://www.comen.com.np

MEX Nepal Founded on August 14 2007:

www.mexnepal.com

History

NDEX was incorporated on November 20, 2008:

http://ndex.com.np NSE online commodity spot exchange marketplace established in 2010: www.nsenepal.com Establishment of six Commodity Exchange Firms by the end of July 2012 Lacks the governing (regulatory) body

Current Situation
NDEX rules are followed at present
People are not aware about the primary or secondary market They invest as per the trend in the market Huge losses to people

Current Situation
57 brokers in NEPSE
As on Aug. 22- 2012, number of listed companies are 267 Proposed classification of listed companies
Class A: elite; companies generating continuous profit, follows corporate governance, and regularly distribute dividends, 133 companies Class B: general; companies that are doing well enough but slow on distributing dividends,

Current Situation
Class Z; companies that are doing poorly both in terms of
financials and corporate governance, and keep getting into trouble with regulatory requirements Class G; firms that are newly listed and are not yet inducted into any other class

Thank you!!

Any Questions?