Something is wrong in the market

Congratulations investors, our market crosses 3000 Index points and 21.64 Arba turnover. This is amazing na. but I am also curious about the money coming into the market. In 2019-20, daily turnover was struggling to cross 1 Arba but after July 2020 when the market is making record high in the everyday transaction, How?

So I am curious about the source of money coming to the market. Let's list out the possible legal source: 

1. The loan from BFIs (Not Margin lending)

2. The loan from BFIs (Margin lending)

3. Overdraft loan is especially taken for own business but putting that money in the market.

4. The loan from co-operative banks

5. Asset under the management company 

Ok, but all these sources are capable of handling almost 15 Arba of daily transactions where the normal market cycle is T+2? Some people can say the buy and sell cycle daily can break the market cycle I agreed with this point but I do not agree upon that all money that comes into the market is completely white, not black.

Our market is so unregulated, that any person can rotate black money without being caught by the regulatory authority. Here is how a person can transact enough money without putting in a PAN number. Let's take an example: a person opens a bank, Demat and broker account every day a person transacts or purchase shares amounting to 5 lakh, he has no source, in only 1 month he can rotate 1 CR and no one will tell the regulatory body that this has happened. Without any identification, a person can transact enough money in the market and rotate black money easily. Here is my suggestion to the government, link citizenship with PAN and make PAN compulsory to open an account open for the purpose of financial and asset transaction through any medium i.e in esewa, bank, connectips, without PAN a person should not be eligible to transaction amounting to Re 1. In the case of new accounts, a person should not be eligible to open any account without PAN and in the case of a minor, they can have parents PAN. In this way, the regulatory body can track every penny of the transaction. I am closely looking Indian economy and its system, I am amazed that a person cannot open a simple bank account without having PAN and Adhar card, and without verifying fingerprints. But in Nepal, if someone has one photo and copy of citizenship that person can open a bank account of others by influencing bank officers. This is also a very big problem existing in Nepal banking system.

Let's talk about one, not illegal but has a high impact on the market “Broker’s Fund”. Big investors or big players are using broker’s funds to play in this market. Players are buying without having a balance in their bank which directly shows fake turnover In the market. Almost 10% of total market turnover contribute by this broker’s fund. 

Let's talk about the authority or regulatory body Securities Board Of Nepal (SEBON) I must tell you that SEBON is the most incompetent, unprofessional and has no integrity regulatory body in Nepal. Now here is your question why? The answer is let's compare SEBON with SEBI (India). At first, I want to clarify that the capital market and its rule and regulatory authority are the same in the world and this does not matter that you are comparing the regulatory body of small economy and big economy. The structure is the same.

Ok SEBI has the ultimate power to stop IPOs, take action against irregularities, if the market performs some exceptional movement then Sebi has the power to check the source of funds coming from, Sebi can direct stock exchange and punish if it finds irregularities. Recently NSE faces some technical problems which impact the market and Sebi fine NSE. The transaction in India are in microseconds, they process an immense number of transactions a day but in 1 year there is no serious problem in the trading management system. There are 2 depository institute and 2 major stock exchange in co-existence and almost till today, I don’t have an article that says their server is down and investor faces problems. One main thing I found is that if some institute wants to have broker license and if the follow process they can open broker but in Nepal, there is the restriction to open new broker, there is the unsaid monopoly of 50 incompetent brokers in Nepal. 

Now you tell me what Nepal lacks. I will not write about the Nepali regulatory body because there is nothing to say. And in Nepal, exactly the opposite happens. I find our regulatory body such “Niriha” that cannot take any action against any company. Do you know the major problem? that is no one is taking responsibility for the failure of the system and I am predicting, Nepal will face huge economic crises if this bobble blast. Companies in Nepal are doing whatever they want and the regulatory body is staying like a statue. If a company launches IPO then that IPO information should be so much clear that when it will list in the market there is no rule about this, Many companies run after issuing IPO, where is Jyoti spinning, where is a national film development company, where is sugar companies. And NEPSE TMS is the biggest blunder in the history of the Nepali share market. And I am convinced that there is corruption happening there. 

 NEPSE, CDSC, Investors forum, finance ministry and SEBON are the institutes who are responsible for the market but they do not seem responsible. I request these bodies to be an institution that has integrity in itself.