What is Secondary Market? How to buy shares from secondary market / brokers?

secondary market

In previous articles we know about details about primary market (IPO) and procedure to apply for IPO shares & document necessary to apply for primary issues. Now, Know what is Secondary Market? How to buy shares from secondary market /brokers?

Secondary market is market where buying & selling of listed shares are done by investors through brokers. Numbers of transaction are made by buyers & sellers with helps of brokers. Buyers buy shares at prevailing price. Stock exchange conducts transactions of buyers & sellers thorough registered brokers. In case of Nepal, Nepal Stock Exchange facilitate buying & selling of securities (share) through brokers. One can directly buy shares from secondary market without participating in primary market (IPO).

Shares allotted in primary market (IPO/FPO) can be sells from secondary market. Secondary market offers chance to buy & sell shares at any time any quantities where as primary market is for only one time. It offers opportunities to buy share or sell all existing share & exit from market any time.

Buyers of share get part of ownership & became shareholders. They have right to claim to profit & obliged to bear losses & debt.

Secondary market process begins from primary market. After the allotment of IPO, respective company will have to list in stock exchange. After the share listed in stock exchange, IPO share will be open for trading. Allottee of IPO can place sell orders to sell if s/he wants to sell.

Documents require for buying shares                                     

  • Open Bank account (Bank must be registered with C-ASBA)
  • Open DEMAT Account (you can open DEMAT account from Banks, Brokers, merchant banker, etc). It consists of 16 digits. It Cost Rs.150.
  • Open transactions account with brokers. (Fill up the KYC forms) Broker will provide transaction Code number.

Place Buy or sell order

Fill up the order form & submit to brokers. You can also place order through telephone & internet during the trading hours. Nepal stock exchange remains open for 4 hours & 5 days in a week. Market open on Sunday to Thursday from 11:00 Am to 3:00 PM.

(Name of stock, quantity, rate of stock must be clear fill up)

Visit www.nepalstock.com for details to know prevailing price of stock.

After order placement, broker process for order execution. If you order is executed you will be informed through SMS in your mobile.

In Case of purchase

Details of purchase will be got through SMS; purchase date, stock, Qty, rate & total amount to be paid after adding commission & fees. After getting SMS of Purchases:

  • Go to broker office
  • Pay cash/Cheque to broker of purchase amount
  • Take receipt from account.

(You will get shares in your DEMAT account after 4-5 days of purchase)

In Case of Sell

Details of sales also get through SMS; sales date, stock, Qty, rate & total amount to be get after deducting commission, fees & gain tax if any. After getting SMS of Sell:

  • Go to broker office
  • Give DEMAT Cheque or DIS (debit instruction slip) to broker.

(You will get DEMAT cheque from where you have open DEMAT account. for eg. Bank, broker, merchant banker, etc)

  • Broker will debited you shares from DEMAT account.

(You have to receive cash/cheque from broker office after 4-5 days).

User of Mero Share software development by CDS & Clearing Limited can submit DEMAT Cheque (DIS) through internet.

  • Login to Mero Share
  • Click on E-DIS (you will be get your sales details)
  • Confirm to send DIS to brokers.

Nepal Stock Exchange(Nepse)  has started Nepse online trading system (NOTS) of securities in Nepal. This implementation make easy for investors/ traders for buying & selling shares. One can place their order for buying & selling & can be execute by own through internet simply staying in home or office without visiting broker offices.

How to starts online trading of stock

  • Go to broker & update your KYC (Know You Customer(Must fill of your DEMAT account details, bank details, email address along with phone number & other necessary details).
  • Broker will send you USER NAME &  URL LINK for online trading of Nepal stock exchange though E-Mail.
  • Open your email & click on given link (you will be directed to Nepse online trading System)
  • Change Your Password & necessary details.
  • Then, LOGIN to Nepse Online trading system (NOTS).
  • Load Fund to online trading system through Banks & Connect IPS (NHCL)
  • Place Buy/Sell order of particulars stocks.

Also Read: How to load fund in Nepse Online Trading System (NOTS)? 

Then after one can place buying & selling orders as per needs & budgets and watch live orders are being executed. Once order executed payment  for buying & sending Debit Instruction Slip as we mention above.

Also Read: Part 1 and Part 2

Updated: 31/05/2019