KATHMANDU, MAR 05 - The Citizen Investment Trust (CIT) has recently appointed a consultant to prepare an action plan under which it will act as a market maker in the capital market.
The action plan will lay down how the CIT would work as a market maker and how other parties could support it by creating a fund. A market maker accepts the risk of holding a certain number of shares of a particular company in order to facilitate trading in that security.
The CIT was given the job of market maker in a bid to revive the stagnant capital market by a meeting of representatives from the Employees Provident Fund (EPF), CIT, Insurance Board (IB), Rastriya Beema Sansthan (RBS), Nepal Telecom (NT) and the Securities Board of Nepal (Sebon) and finance secretary Krishna Hari Banskota held at the Finance Ministry on Feb 26.
The other participants have agreed to put in money to create a fund for the CIT as market maker to use.
CIT executive director Rishi Ram Gautam said that they would receive the action plan by the end of this week, and the CIT board would discuss it before endorsing it. Once the plan is endorsed, it will be presented to the above stakeholders for their approval.
"If everything goes okay, we will be able to present the action plan to the Finance Ministry and other stakeholders by mid-March," said Gautam. "If Sebon approves the action plan prepared by us, then we will immediately start building the infrastructure and the fund." Sebon officials said that if the action plan is convincing and technically sound, they would not have any problems approving it. "I will approve the action plan within four to five days," said Sebon Chairman Babu Ram Shrestha. "I have been asking the CIT to prepare the action plan as soon as possible."
After the CIT gets the go-ahead, it will appoint a fund manager and other experts to start operations. Different government agencies like the EPF, CIT, RBS and NT have the potential to invest billions in the fund. However, they are yet to decide the size of the fund.
Earlier, the government had asked government agencies like the EPF, NT, CIT and RBS to invest in the secondary market to revive the stock market, but they were not interested.
Source: Kantipur
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