Finance ministry approves SEBON’s proposal to reduce stockbrokers’ commissions

In the revised rule, stockbrokers will get brokers’ commissions between 0.243 percent and 0.36 percent

KATHMANDU, May 1: The Ministry of Finance (MoF) has given a go-ahead to the Securities Board of Nepal (SEBON) to reduce the commission rates of stockbrokers.

According to the MoF, Finance Minister Barshaman Pun last week approved the SEBON’s proposal to reduce the stockbrokers’ commission rates. A SEBON board meeting held on October 18, 2023 decided to reduce the commission rates of both the brokers and SEBON by 10 percent. 

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As of now, investors have been paying the stockbrokers commissions between 0.27 percent and 0.40 percent based on their transaction volume. In the new provision, the lower bound is set at 0.243 percent while the upper bound will be 0.36 percent.

Earlier on December 27, 2020, the SEBON revised the rate of brokers’ commissions. At present, investors pay a 0.40 percent broker commission on transactions of up to Rs 50,000. For transactions between Rs 50,000 and Rs 500,000, the commission is set at 0.37 percent.

For the transactions between Rs 500,000 and Rs 2 million, investors need to pay commissions at the rate of 0.34 percent. While transactions exceeding Rs 2 million and up to Rs 10 million are subjected to a commission of 0.30 percent, the rate for any amount beyond Rs 10 million is 0.27 percent. 

Additionally, in the purchase and sale of government or institutional bonds, a service charge of 0.10 percent is applicable for transactions up to Rs 50,000 and 0.05 percent for transactions between Rs 50,000 and Rs 5 million. The commission rate for transactions of such credit instruments is 0.02 for the amount exceeding Rs 5 million.

In the new rule, the commission rate for transactions of up to Rs 50,000 will be 0.36 percent; for Rs 50,000-Rs 500,000, it will be 0.33 percent; and for Rs 500,000-Rs 2 million, it will be 0.306 percent. Similarly, the rate of commission for transactions of Rs 2 million-Rs 10 million will be 0.27 percent and for any amount over Rs 10 million, it will be 0.243 percent.

The MoF approved the SEBON’s plan to reduce commissions of the stockbrokers after around six months of forwarding its proposal to its line ministry. The regulatory body has not got its chairperson since the former chairman Ramesh Hamal retired from the post last January. Failing to appoint a new chairperson, the MoF has delegated authority to Joint-Secretary Ritesh Shakya who is serving as the acting chairperson of the SEBON.