Laxmi Capital News
Sebon asks CDSCL to defer C-ASBA implementation for a month

Securities Boardof Nepal (Sebon) has instructed CDS and Clearing Ltd to defer theimplementation of Centralized Application for ASBA-based Issuance (C-ASBA) by amonth. 

The new system,which is an upgraded version of the Applications Supported by Blocked Amount(ASBA) system, allows investors to apply primary shares through a uniformprocess at all ASBA members which is operated in a centralized way by theCDSCL. 

The capital marketis now gearing up for the implementation of C-ASBA once all public issues aremade mandatory to use ASBA. Under the system, investors' money equivalent tothe subscription of initial public offering (IPO) or follow-on public offer(FPO) gets blocked until the share allotments are made. Respective bank orfinancial institutions (BFIs) will deduct funds from the applicant's bankaccount only after share allotments are made and the remaining fund is freed. 

Earlier onTuesday, CDSCL published a notice, announcing mandatory implementation ofC-ASBA, stating that guideline of the new system has already been approved bythe Sebon.

Under C-ASBA, allinstitutions involved in the public issue process are woven under thecentralized electronic system operated by the CDSCL through software. Officialssay C-ASBA will reduce the time taken for the allotment of public issue as thedemat accounts of the applicant gets verified prior to the application underthis new system which is linked with the centralized system. Similarly,investors, who are registered once at C-ASBA, can apply for shares from theirhome through Internet, ending the requirement to manually submit applicationforms. As issue managers will be able to get all applications from all BFIsinstantly through the software, the allotment process will also be completedimmediately after the subscription is closed, according to CDSCL officials. 

However, Sebon --the capital market regulator -- on Wednesday directed the CDSCL to postponeimplementation of the system by a month, stating that more than 2,500 branchoffices of bank and financial institutions (BFIs), who are ASBA members, needsome to complete preparation and develop infrastructure to join C-ASBA.

Sebon officialssay that the stock market regulator had to intervene after ASBA members madecomplaints at the regulatory body, stating that they need some preparationtime. “As ASBA members need some time to train themselves on the new system,while investors should get C-ASBA registration number for the new system to beeffectively implemented, the Sebon has decided to instruct CDSCL to make thesystem mandatory only after a month,” a senior official of Sebon toldRepublica. 

Source: MyRepublica, 25th January 2018

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