Is Online trading all that investors wish for ????

At the time when all the general investors, media and forums are raising voices for the quick implementation of online trading, a question arises “Is online trading all that investors want???, will the Nepalese stock market reach an international level just with the online trading implementation ???

Definitely, the introduction of online trading will provide an access for share market to people from every corner of the country. The people from every city and villages of Nepal will be able to park their funds in the instruments that will provide better returns. The excess supply of shares will gradually be balanced as a result of rising demands. The shares will eventually become liquid, as people wanting to buy and sell can do that anytime from anywhere they want.  But this is not the “only” thing investors want.

In order to develop the stock market, there are various other developmental works that are equally important. Those work will neither demand huge investments nor require introduction of new policies, but will make our domestic market, a healthy and free market.   

Insider Trading

This is not a new word in stock markets and especially in Nepal where the convicts are not even punished. Key officials of the listed companies have an access to secret information that can result in price fluctuation. Those people ultimately end up taking some early moves and get benefitted when the news are finally made public. This not only benefits the “limited” people but put the general investors in trap.

In Nepal, almost nothing is done by the regulatory body to prevent this wrong action. The scenario is becoming more and more frequent, and no voices are raised against it. With the introduction of Online trading, this practice will become more convenient as the people will not even require a broker to place the orders.

Timely Annual General Meeting

Annual General Meetings (AGM) are the meeting annually held by companies to make important decisions and inform the members about past and future activities. This is the event when the investors and the executives sit together and discuss about the events and the financial performance, making the company more transparent. As per the rule, every company needs to conduct an AGM within 6 month of the expiry of financial year.

This is almost 10^th month after the completion of the fiscal year and there are still a significant number of companies who are yet to conduct their AGM. This not only shows how irresponsible they are towards their shareholders, but also questions their operation. Another fine example of carelessness is demonstrated by a national-level development bank which closed its shareholders book 7 months back, and yet not shown any sign of conducting the AGM.

Although there are specific rules for the AGM, the companies are confidently breaking it and the regulatory body is doing almost “Nothing” on this regard.

Misleading Indicators and Information

Every time the companies publish their financial report, there are 10-12 companies who report wrong ratios. The major ratios are either calculated wrong or in a misleading way that ultimately puts investors in trouble. The misleading indicators make the companies look more beautiful, than they actually are. Thanks to some online news portals who calculate it well and presents them, but still there are a lot of people who rely on the wrong indicators and act accordingly.  The regulatory body knows it well but have done almost nothing to stop this.

Moreover, how wonderful would it be if we could find all the quarterly reports in one single place, say official website of Nepse, on a specific date. The investors would no more require to search newspapers to newspapers to know about their company’s performance. In addition, if first Microfinance can publish it on the first day, why not others???   

The above mentioned issues are some among the most important issues that needs to be addressed as soon as possible. Though introduction of online trading, Broker License to banks, presence of NRNs in stock market are important issues but the above mentioned issues are equally important. These don’t require huge investments but require a supervision from the regulatory body’s side.