We gave a information about IPO and FPO in share education part-2 and tried to give information about how to apply from C-ASWA and ASWA. We hope that you have learned about the primary stock market from share education part-2 and have invested in the IPO and FPO of various companies or are about to do so. Now you have to go to the secondary market to sell the shares you bought in the primary stock market. Therefore, in share education part-3, we will try to give information about the second stock market and how to buy shares from here.
Most of the educated urban people of Nepal have no knowledge about the stock market, let alone the uneducated and remote people. Only a very small percentage of Nepalese people have knowledge about the stock market. At present, many Nepali people are attracted to the primary share market, this is seen by looking at the applications for the IPO. But still most of the Nepalese people do not know about the secondary market and do not have access to the secondary market. In some cases, even if they have knowledge and access, the secondary market is more risky than the primary stock market, so people who don't want to bear the risk do not want to enter this market. But now, with access to the Internet, most of the Nepalese citizens have access to various online media and Facebook groups, so students, housewives and ordinary citizens have also started showing interest in the secondary market. By studying and understanding the secondary market in depth, After studying the financial condition of the company and trading shares at the appropriate time, the secondary market is also an area where good money can be earned. That's why many Nepali citizens are gradually becoming more attracted to the secondary market.
Many friends, brothers, relatives, students and housewives tell me that they want to trade shares in the secondary market, but they do not know much about the secondary market. What is the secondary market? How to buy and sell shares in this market? What is needed to buy and sell shares in this market? Who to contact to buy and sell shares in the secondary market? Where to go to buy shares? How to pay after purchase? How to get money after selling shares? Which company's shares are better to buy? Asking questions etc.
Today I will inform you about the secondary market and the processes of buying and selling shares from this market, clearing your various queries in share education part-3.
What is the secondary market?
Any public company distributes shares to investors within 15-20 days of issuing IPO in the primary market for raising capital. The shares issued in the primary market are listed in NEPSE within 4-5 days of allotment of shares. After the primary shares are listed in NEPSE, the place where the shares are bought and sold is called the secondary market, the shares of the company can be bought and sold from the same place or broker company.
In this way, the market in which the shares issued in the primary market are resold or bought is called the secondary market. Nepal Stock Exchange is the only secondary market in Nepal. As the buying and selling of shares in the secondary market is done between investors through the mediation of brokers, there is no relation with the company in buying and selling shares. According to the law, it is not possible for two investors to buy and sell shares on their own accord, so when buying and selling shares, they must go to the broker companies licensed by the Securities Board and complete the proper procedure to issue a purchase and sale order. According to this order, the broker buys and sells shares. For buying and selling shares in this way, brokers take commission as prescribed by law.
What is a broker company?
A broker is an organization licensed by the Securities Board to deal in securities i.e. shares. At present there are 50 broker companies in Nepal and their 47 branches are located in major cities of Nepal. You can buy and sell shares from a good broker company wherever you want. When choosing a broker company, it is better to choose a company that has not yet been subject to any action.
When buying and selling shares from the secondary market, the following steps must be completed:
Step 1:-
Just as a demat account is mandatory for buying IPO shares from the primary market, in the same way, investors must open a demat account before ordering the broker to buy and sell shares from the secondary market. Without a demat account, shares cannot be bought and sold in the secondary market. Therefore, demat account should be mandatory for investors.
What is demat account?
A demat account is an account that holds the details of shares. As the bank opens the depositor's account to deposit and withdraw funds. When depositing money, the bank adds it to the account and when it withdraws it, it deducts it. Likewise, every share investor opens an account and deposits shares of various companies in the central deposit system for share transactions and keeping the details of share transactions. Central Depository System ie CDS is a bank of shares. Even in this demat account, shares will be added to the account after purchase and will decrease after sale. The remaining shares after sale remain as balance in the demat account.
If you have not opened a demat account yet, you can open a demat account by going to any commercial bank branch or broker company. To open this account, a photograph, a copy of the citizenship and 150 rupees are required and some banks also open a demat account free of charge when opening a bank account in that bank. Do not open more than two demat accounts.
The second step:
is to open a trading account to trade with a broker in the secondary market, for which customer identification details (KYC) are required to be filled. To buy and sell shares, customer identification details account, you can fill the customer identification details by going to the broker company of the place where it is easy for you to buy and sell shares. You can fill the customer identification details in as many broker companies as you like. A photo and copy of citizenship is also required for this. Customer identification details are filled once to a broker.
The third step :-
It is now how many shares of which company will you buy? You can give a purchase order to the same broker company. Shares with face value of 100 should be ordered for at least 10 shares. The time for ordering shares in the secondary market is from Sunday to Thursday between 11:00 am and 3:00 pm.
When buying and selling shares, the purchase and sale order form should be filled and submitted. When you buy shares for the first time, you have to pay a certain percentage of the amount of the shares to the broker company in advance, but after trading two or four times, you don't have to pay the money in advance in the future after you get to know and trust the broker company. Then you can order share purchase and sale over the phone. Within three to four days of buying the shares, the money for buying the shares should be paid to the broker company through a check. The check is given at the place where the demat account is opened. Similarly, three to four days after the sale of shares, a check for the amount of shares sold should be taken from the broker company. The broker company takes a fixed percentage commission for buying and selling your shares. A broker company is an officially recognized broker company that works between the buyers and sellers of shares.
The semi-online system has also been started as a facility to buy and sell shares from the secondary market since 2nd of Baisakh 2075.
How to buy and sell shares through semi-online system?
In the new system developed in the broker back office, it is arranged that the investor can give orders to buy and sell shares at the broker's office through mobile, computer, email and SMS with the help of the internet in the broker back office software. For this, the investor should get a sign and a secret number password from the office of the respective broker. After the electronic demand sent by the investor is entered into the trading system of the Nepal Stock Exchange by the stock broker, buying and selling can be done if the purchase order and the sale order match.
It is also seen as a preliminary exercise for the online transaction system to be implemented by NEPSE in the near future. With the introduction of this technology, it is felt that it is very easy for investors to buy and sell shares in the secondary market.
Step 4
:- When buying shares of any company from the secondary market, do not buy based on rumours.
Rather than saving money in the bank at a low interest rate, it is better to invest in the company's shares for the long term, you can get a very good return from the shares.
(The Author is a Stock expert
Source: OnlineKendra.Com | Raju Dhakal
