KATHMANDU: Questions have been raised about the data security of Nepal Stock Exchange (NEPSE), the regulatory body of the capital market, after a senior employee was found using a user ID to sell shares.
A high-ranking NEPSE employee was found trading shares through their TMS account. This revelation has led to concerns about the reliability of the share market and the trust of general investors.
Niranjan Phuyal, the second-ranking official at NEPSE after the CEO, was found trading shares through Broker No. 50 using client code NP526069. Records show that on April 29, 2021, at 11:53 a.m., Phuyal traded shares worth 150,000 rupees.
When questioned, NEPSE’s Deputy CEO stated that employees are allowed to apply for IPOs and sell shares obtained through IPO allocations but are prohibited from purchasing shares in the secondary market.
Phuyal defended his actions, claiming the shares sold were acquired through IPOs. NEPSE’s Information Officer, Murahari Parajuli, also argued that employees are permitted to sell IPO shares obtained before joining NEPSE.
However, another NEPSE IT employee highlighted that employees should not trade shares directly or through family members, as it creates a conflict of interest. The source labeled such actions as unethical and illegal insider trading.
Legal Implications
Nepal’s Securities Act 2063 (amended in 2074) prohibits conflicts of interest in trading. Sections 91 and 92 categorize insider trading as a punishable offense, with penalties including up to one year of imprisonment and a fine of 150,000 rupees. This provision has been in effect since 2063.
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