How to Buy and Sell Shares in Nepal: Complete NEPSE & TMS Trading Guide

While primary market IPOs introduce retail investors to corporate ownership, the secondary market on the Nepal Stock Exchange (NEPSE) is where shares are actively bought and sold every trading day. To participate in secondary trading in Nepal, you need an active Trade Management System (TMS) account linked with a licensed stockbroker.

This comprehensive guide explains the end-to-end mechanism of buying and selling shares on NEPSE, from opening a broker account and depositing collateral to placing Limit orders, completing EDIS share transfers, and understanding all statutory transaction costs.

1. The Four Foundational Pillars of Secondary Trading

Before placing your first trade on NEPSE, ensure you have these four interconnected accounts set up:

• DEMAT Account: Your 16-digit electronic depository account operated by CDSC that holds your shares digitally.
• MeroShare Account: The online portal used to calculate purchase costs (WACC) and transfer sold shares through Electronic Instruction Slips (EDIS).
• Bank Account with ConnectIPS: An active Nepali commercial or development bank account linked with ConnectIPS for instant digital collateral loading and settlement.
• Broker TMS Account: Your personal login to NEPSE's automated trading engine provided by your chosen SEBON-licensed brokerage firm (Brokers 1 through 90+).

2. How to Open a Broker Account and Set Up TMS

Under SEBON directives, you can open a broker account completely online without visiting the broker's physical office:

1. Select a Licensed Broker: Choose a reputable SEBON-registered stockbroker with reliable online customer support and prompt payment disbursements.
2. Submit Online KYC: Visit the official TMS portal of your selected broker (e.g., https://tmsXX.nepalstock.com.np, where XX is the broker number). Fill out the client registration form with your citizenship details, 16-digit DEMAT BOID, bank account number, and PAN.
3. Upload Required Documentation: Attach digital scans of your Nepali citizenship certificate, a recent passport-sized photograph, a selfie holding your citizenship card, and a map of your residence location.
4. Receive TMS Login Credentials: Once the broker's compliance team verifies your KYC, you will receive your unique Client Code and temporary password via email. Log in immediately and set up a secure permanent password.

3. Collateral Management: Funding Your Buy Orders

Under NEPSE trading regulations, investors cannot buy shares on credit. You must provide collateral before the system permits you to place a buy order:

• Collateral Multiplier: Most brokers provide a 4x trading limit on deposited cash collateral (e.g., depositing NPR 25,000 cash collateral allows you to place buy orders up to NPR 100,000).
• Loading Collateral Online: Within your TMS dashboard, navigate to Fund Management → Collateral Management → Load Collateral. Select ConnectIPS or supported mobile wallets, enter the amount, and confirm the transaction. The trading limit is updated instantly.
• Bank Guarantee Option: High-net-worth and institutional traders can also submit an official Bank Guarantee from a commercial bank in lieu of cash deposits.

4. Understanding Order Types on NEPSE

NEPSE operates an automated continuous matching engine from Sunday to Thursday (11:00 AM to 3:00 PM). Understanding order types ensures you never overpay or sell below your desired price:

5. Step-by-Step: Buying Shares on TMS

1. Log into your broker TMS portal during active market trading hours (11:00 AM to 3:00 PM).
2. Navigate to Order Management → Buy/Sell.
3. Select the Buy tab.
4. Enter the listed company's stock symbol (e.g., NABIL, GBIME, SHIVM).
5. Specify the desired order quantity (number of shares/kitta) and your limit price. Ensure your order price falls within NEPSE's daily 10% circuit filter and 2% order limit band.
6. Click Place Order and review the order confirmation modal. Once confirmed, your order enters NEPSE's Central Order Book.
7. Track the status under Order Book. When a matching seller is found, the status updates to Completed.

6. The T+2 Settlement Cycle & Transferring Sold Shares (EDIS)

NEPSE operates on a strict T+2 rolling settlement cycle (Transaction Day + 2 clearing business days). Both buyers and sellers must fulfill their legal obligations within this statutory window:

For Buyers (Settling Payment)

Once your buy order executes on Day T, you must pay your broker the full purchase amount minus any cash collateral by Day T+1 or Day T+2. Most brokers offer direct payment through ConnectIPS inside TMS under Fund Management → Fund Settlement.

For Sellers (Transferring Shares via MeroShare EDIS)

When you sell shares on NEPSE, you must physically deliver the digital units to the clearing house through MeroShare EDIS before 6:00 PM on Day T+1. Failure to do so results in a mandatory 20% closeout penalty under CDSC by-laws:

1. Log into MeroShare (meroshare.cdsc.com.np).
2. Click on My Purchase Source and calculate the Weighted Average Cost of Capital (WACC) for the sold script.
3. Navigate to My EDIS → Transfer Shares.
4. Select the settlement transaction, tick the sold shares, and click Transfer. Your shares are debited and transferred to the clearing pool account automatically.

7. Complete Breakdown of Trading Costs & Commissions

Every transaction on NEPSE incurs statutory fees prescribed by SEBON and the Government of Nepal:

• Brokerage Commission (Tiered):
  • Up to NPR 50,000: 0.40%
  • NPR 50,001 to NPR 500,000: 0.37%
  • NPR 500,001 to NPR 2,000,000: 0.34%
  • NPR 2,000,001 to NPR 10,000,000: 0.30%
  • Above NPR 10,000,000: 0.27%
• SEBON Regulatory Fee: 0.015% on total transaction turnover.
• DP Transaction Fee: Fixed flat fee of NPR 25 per company traded per day charged by CDSC.
• Capital Gains Tax (CGT - Sellers Only): Individual resident investors pay 5% (holding period ≥ 365 days) or 7.5% (holding period < 365 days) on net capital gains.

Professional Tip: You can calculate your exact net proceeds, commissions, and tax deductions using RisePaisa's interactive NEPSE Share Trading & Capital Gains Calculator before executing trades.

Common Beginner Mistakes to Avoid

• Placing market orders in illiquid stocks: Low-volume stocks can experience wide bid-ask spreads, causing you to buy at an inflated price or sell far below market value. Always prefer Limit orders.
• Forgetting to complete MeroShare EDIS: Missing the 20% auction penalty cutoff causes severe financial losses on executed sell orders. Always complete WACC and EDIS immediately after the market closes.
• Overtrading and ignoring commission friction: Frequent short-term trading accumulates broker fees, SEBON charges, and DP costs that rapidly erode small investment profits.