Kathmandu. KATHMANDU: Nepal’s two biggest securities broker companies have started the process of taking loans worth Rs 3 billion from banks with an aim to expand margin trading services.
Dakshinkali Investment and Securities Pvt Ltd and Kalash Stock Market Pvt Ltd have assigned credit rating for short-term bank loans. These companies, which have traditionally relied solely on broker commissions, have in recent years prioritized margin lending to diversify their sources of income through interest income.
Dakshinkali Investment and Securities, which has been active in the market for the past 15 years, has been rated for short-term loan facility of Rs 2 billion. Care Ratings Nepal has assigned a rating of “CARE-NP A3” to the proposed loan of the company. The broker, which is currently ranked 18th, plans to use its loans primarily to provide margin trading facilities to investors and mobilize them for working capital management.
In the financial year 2082/83, the company had a turnover of Rs 54.26 billion and a net worth of Rs 503 million. Similarly, another emerging broker company, Kalash Stock Market, is preparing to take a loan of Rs 1 billion.
Care Ratings Nepal has assigned ‘CareNP A4 Plus’ rating to the company, which has achieved a market share of 1.12 percent in a short period. Kalash, which started its business business in 2024, has reached its customer base of about 17,340.
The company has adopted a strategy to provide margin facility to its customers at a premium rate by taking loans from banks at cheap interest rates. Although broker commission accounts for 96 per cent of the company’s income from the stock exchange, it is expected that interest income will help balance the financial balance in the coming days.
Brokers have been attracted to this service due to the policy flexibility of the Nepal Rastra Bank on margin loans and the Margin Trading Facilitation Directive issued by the Securities Board of Nepal (SEBON). KATHMANDU: Nepal Rastra Bank (NRB) has increased the single customer loan limit of banks and reduced the risk burden of share loans to 100 percent.
In addition to this, the government has adopted a policy to start short selling and intraday trading in the stock market in the coming days and to allow NRNs to enter the secondary market, which is expected to increase liquidity and transactions in the market and the demand for margin loans will be high. However, with the expansion of margin trading, the risk of broker companies is also increasing.
Experts suggest that attention should be paid to credit risk and liquidity management as rapid fluctuations in the market can affect both commission and interest income. The additional loan of Rs 3 billion through brokers is expected to increase the availability of capital in the secondary market and keep the overall market morale high.
