A STUDY

ON
EFFECTIVENESS OF NEPSE ONLINE TRADING SYSTEN (NOTS)

Submitted By:
Rajesh Kumar Singh
Roll No: 17030834
PU Registration No: 2016-02-03-2316

A Summer Project Work Report submitted to Pokhara University in partial

fulfilment of the requirement for the degree of

Bachelor of Business Administration

(BBA)

At the
Nepal Collage of Information Technology
Affiliated to Pokhara University
Lalitpur, Kathmandu
December, 2019
 DECLARATION

This summer project report entitled “A Case Study of NEPSE Online Trading System”
which is submitted by me in partial fulfillment of the requirement for the award of BBA
degree of Pokhara University comprise only my original work and due acknowledgement
have been made to materials used in the report.

Name: Rajesh Kumar Singh

Roll No: 17030834
Date: December, 2019
Signature:

i
 ACKNOWLEDGEMENTS

I would like to express earnest and heartfelt graduate to my supervisors Mr. Bhakti Ram
Ghimire and Mr. Bijendra Raut Kathmandu for their untiring guidance and expert
supervision throughout my project work report.

I owe my sincere and special gratitude to Mr. Bijendra Raut for continuous encouragement
throughout the project work report.

I would like to extent my warmest thanks to all the students, friends and those person for
their support and assistance during making this summer project work report.

I special thanks to Nepal College of Information Technology, Balkumari, Lalitpur, Nepal

I am very much thankful to all my friends and colleagues of my college for their help during
my report.

Finally, I would like to thank all of them who encourage me a lot and for their help during
my project work report.

ii
 EXECUTIVE SUMMARY

The summer project work report is an essential and integral part of BBA program of Pokhara
University. It helps us to acquire theoretical and practical knowledge in different aspects of
management of an organization.

To acquire the existing delivery system in the district in terms of infrastructure, human
resource, financial support, availability of service and accessibility of service.

Analysis of system collect the relevant information from different sources, analyze and
interpret them, communicate with the people, appreciate and work single. Prepare the
primary profile including organization structure. Collection of primary and secondary data
through interview, observation, and care study.

So, the summary project work report is essential and integral part of BBA program of
Pokhara University.

iii
 TABLE OF CONTENTS

Page No.
Declaration i
Acknowledgement ii
Executive Summary iii
Table of Contents iv
List of Tables vi
List of Figures vii
List of Abbreviations viii

CHAPTER - ONE: INTRODUCTION

1.1 Background 1
1.1.1 History of NEPSE 1
1.1.2 Structure of NEPSE 2
1.1.3 Introduction to NOTS 3
1.2 Objectives of the Study 4
1.3 Need and Scope of the Study 4
1.4 Literature Review 5
1.5 Research Methods 6
1.5.1 Research Design 6
1.5.2 Nature and Source of Data 6
1.5.3 Population and Sample 7
1.5.4 Data Collection Techniques 7
1.5.5 Data Analysis Methods 8

CHAPTER - TWO: DESCRIPTIVE ANALYSIS

2.1 Data Presentation 9
2.1.1 Presentation of Questionnaire Data of Investors 9
2.1.2 Presentation of Questionnaire Data of Stock Broker Offices 11
2.2 Data Analysis 13
2.2.1 Analysis of Questionnaire Data of Investors 13
2.2.2 Analysis of Questionnaire Data of Stock Broker Offices 16
2.2.3 Analysis of Secondary Data 19

iv
 2.3 Main Findings and Discussion 21

CHAPTER - THREE: SUMMARY AND CONCLUSIONS

3.1 Summary of the Findings 23
3.2 Conclusions 24
3.3 Recommendations 26

BIBLIOGRAPHY 27

APPENDICES 28
Appendix - I 28
Appendix - II 30

v
 LIST OF TABLES

Table No. Page No.

Table 1.1: Structure of NEPSE 2
Table 2.1: Distribution of Respondents by Gender 9
Table 2.2: Distribution of Respondents by Age 10
Table 2.3: Distribution of Respondents by Academic Qualification 11
Table 2.4: Distribution of Respondents by Total Number of Clients 12
Table 2.5: Distribution of Respondents by NOTS Clients 13
Table 2.6: Gender-wise effectiveness 14
Table 2.7: Age group and Effectiveness 14
Table 2.8: Academic Qualification and Effectiveness 15
Table 2.9: Total clients and Effectiveness 17
Table 2.10: NOTS clients and Effectiveness 17
Table 2.11: NOTS save cost and Effectiveness 18
Table 2.12: Total number of NOTS user investors 20

vi
 LIST OF FIGURES

Figure No. Page No.

Figure 2.1: Distribution of Respondents by Gender 9
Figure 2.2: Distribution of Respondents by Age 10
Figure 2.3: Distribution of Respondents by Academic Qualification 11
Figure 2.4: Distribution of Respondents by Total Number of Clients 12
Figure 2.5: Distribution of Respondents by NOTS Clients 13
Figure 2.6: Gender-wise effectiveness 14
Figure 2.7: Age group and Effectiveness 15
Figure 2.8: Academic Qualification and Effectiveness 16
Figure 2.9: Total clients and Effectiveness 17
Figure 2.10: NOTS clients and Effectiveness 18
Figure 2.11: NOTS save cost and Effectiveness 19
Figure 2.12: Total number of NOTS user investors 21

vii
 LIST OF ABBRIVATIONS

BBA : Bachelor of Business Administration

CDSC : Central Depository System and Clearing
CEO : Chief Executive Officer
KYC : Know Your Customer
NEPSE : Nepal Stock Exchange
NO. : Number
NOTS : NEPSE Online Trading System
PU : Pokhara University
SEBON : Security Board of Nepal
UAT : User Acceptance Testing

viii
 CHAPTER - ONE
INTRODUCTION

1.1 Background
Nepal Stock Exchange, in short NEPSE, is established under the company act, operating
under Securities Exchange Act, 1983. Its main objective to impart free marketability and
liquidity to the government and corporate securities. It facilitating transactions in its trading
floor through member, market intermediaries, such as broker, market makers etc. NEPSE
start its trading floor on 13th January 1994.

Government of Nepal, Nepal Rastra Bank, Nepal Industrial Development Corporation and
members are the shareholders of NEPSE. Members of NEPSE are permitted to act as
intermediaries in buying and selling of government bonds and listed corporate securities. At
present, there are 50 member brokers, who operate on the trading floor as per the Securities
Exchange Act, 1983, rules and by-laws. NEPSE has also granted membership to issue and
sales manager securities trader (Dealer). Issue and sales manager works as manager to the
issue and underwriter for public issue of securities whereas securities trader (Dealer) works
as individual portfolio manager.

1.1.1 History of NEPSE

The history of securities market began with the floatation of shares by Biratnagar Jute Mills
Ltd. and Nepal Bank Ltd. in 1937. Introduction of the Company Act in 1964, the first
issuance of Government Bond in 1964 and the establishment of Securities Exchange Center
Ltd. in 1976 were other significant development relating to capital markets.

Securities Exchange Center was established with an objective of facilitating and promoting
the growth of capital markets. Before conversion into stock exchange it was the only capital
markets institution undertaking the job of brokering, underwriting, managing public issue,
market making for government bonds and other financial services. Nepal Government, under
a program initiated to reform capital markets converted Securities Exchange Center into
Nepal Stock Exchange in 1993.

1
1.1.2 Structure of NEPSE
The current paid-up capital of NEPSE is approximately USD 4.5 million. Government of
Nepal, Nepal Rastra Bank, Rastriya Banijya Bank (former, Nepal Industrial Development
Corporation) and other securities businessperson (brokers) are the shareholders of NEPSE.
The following table shows the percentage of shareholdings by respective shareholders on
the capital structure:
Table 1.1
Structure of NEPSE
S.N Owners Ownership (Percentage)
1 Government of Nepal 58.66
2 Laxmi Bank Limited 10
3 Prabhu Bank Limited 10
4 Nepal Rastra Bank 14.60
5 Rastriya Banijya Bank 6.12
6 Broker Members 0.62

The another company related with NOTS is CDS and Clearing Limited, a company
established under the company act is a company promoted by Nepal Stock Exchange Limited
(NEPSE) in 2010 to provide centralized depository, clearing and settlement services in
Nepal. The company is inaugurated on 31st March 2011. The main objective of the company
is to act as a central depository for various instruments (Equity, Bonds, and Warrants etc.)
especially to handle securities in dematerialized form. This organization is entrusted with
the safekeeping, deposit, and withdrawal of securities certificates and transfer of
ownership/rights of the said instruments. The depository functions will be performed by the
company under the securities regulations of Securities Board of Nepal (SEBON). CDSC is
a wholly owned subsidiary company of Nepal Stock Exchange Ltd. (NEPSE) which was
established on 7th Poush 2067.

CDS and Clearing Limited provide services of account opening, dematerialization,

transmission of securities, account statement, rematerialisation, pledging. This company is
regulatory body of NEPSE Online Trading System. Currently it also provide services of
automatic weighted average price for calculation of actual capital gain tax in right and bonus
share.

2
1.1.3 Introduction to NOTS
Nepal Stock Exchange Limited (NEPSE) officially launched NEPSE Online Trading System
(NOTS) on 6th November, 2018. "NOTS" is designed to allow investors to place their orders
online, while everything including trading, clearing and settlement can be carried out
electronically. A broad spectrum of market participants will benefit from the increased
convenience of the new system. Furthermore, the system will bring a new level of dynamism
to Nepal's stock market.

NEPSE has been facing criticism from the investors for its delay in implementation of the
modern online trading system. NEPSE has previously invited bids from eligible bidders for
User Acceptance Testing (UAT) of the new system to ensure that the system delivered by
the YCO Pvt. Ltd. can handle required tasks in real-world scenarios in line with NEPSE’s
specifications. UAT will also go hand in hand with parallel implementation of new and
existing trading systems. The full-fledged implementation of the new system will start upon
completion of UAT. The fully-automated trading system developed by YCO Pvt. Ltd, an
information technology firm, will allow investors to place their orders to buy or sell shares
online, while everything - payment, clearing and settlement - can be carried out
electronically. Fully-automated trading system will come into operation through NEPSE
server. The new system can handle nearly 23,000 transactions in a millisecond compared to
an estimated 150,000 orders that the current system can accept in a day. According to
Chandra Singh Saud, chief executive officer of NEPSE, “In the initial phase, various
problems were created to prevent the implementation of the online system. With the effort
of the NEPSE and other organizations involved in online trading, the problems have been
resolved and it has come into smooth operation,”

Full-fledged online stock trading that allows investors to place buy and sell orders over the
internet. The NEPSE Online Trading System (NOTS) is expected to ease management of
the growing transaction volume and provide access to a large number of potential investors.
To use the new system, investors need to obtain their user ID and password from their
respective brokers after updating their Know Your Customer (KYC). Under the semi-
automated system that was in place previously, investors were able to observe only the status
of their trading, and they could not place an order to buy or sell shares.

3
1.2 Objectives of the Study
The main objective of this study is to show effectiveness of NEPSE Online Trading System.
This study show the view of investor, broker and regulatory bodies officials towards NEPSE
Online Trading System. This study concluded by showing weather NOTS user satisfied or
not by using Online Trading System over existing computerized trading system.

General Objective
 To evaluate investor’s satisfaction on Online Trading System.
 To examine the attitude of regulatory bodies towards NOTS.

Specific Objective
 To know how Online Trading System work.
 To access problem face by investors while using Online Trading System.

1.3 Need and Scope of the Study

Nepal Stock Exchange is only one stock market in Nepal. Investor can only buy and sell
their securities from NEPSE. Due to increase in technology NEPSE also launch their online
trading system. It enable investor to trading from the different country of the world from
secondary market. It increase number of investor in secondary market which help in
economic development of our country. So this study is useful in understanding of online
trading system as well as satisfaction of investors.

 This study help to analyze the effectiveness of NOTS

 This study important to get feedback about NOTS from investor, broker and
regulatory bodies officials,
 This study help to determine need for improvement of NOTS.

Scope of the Study

 Every investors and broker opinion cannot included in this study due to time and
resource unavailability.
 This study cannot give depth knowledge of Online Trading System.
 Respondent are only selected from only Kathmandu valley.
 This study only shown the effectiveness of NOTS.

4
1.4 Literature Review
The NOTS launch event was inaugurated by Honorable Finance Minister, Dr. Yuvaraj
khatiwada. On the occasion, Honorable Finance Minister, stated that, "With the launch of
NOTS, Nepal's capital market has taken a new leap". He further added, apart from
introduction of new technology it is also necessary to have policy improvement, new product
development, as well as there should be increase in investor participation and expansion of
current capital market. The program was preceded by Laxman Neupane, Chairman and with
short welcome speech by Chandra Singh Saud, CEO of NEPSE.

Following are some research that have been review for this research. Research that are
conducted in the field of Nepalese stock market. From varies journals and articles are studied
for literature review.

Bhattarai (2006) has performed a study on “public response to initial public offering in
Nepal” with the basic objective of assessing public response to the initial public offering.
However, the study also focused on the dealing process and pace of the IPO. The study has
used both primary and secondary data. Primary data were mainly collected through direct
questionnaire provided to the general investor while secondary data were collected from
various publication of SEBON, NEPSE and various other institutions. The study conducted
there most of the general investor in Nepal do not have significant information regarding the
primary market but still they very much interested to invest money in the primary market. It
also found that almost each sector was getting good response from public. Especially
financial institutions and insurance companies were becoming more preferable for public
than the other non-financial sector.

2018 YCO Private Limited has published Order Management System User Manual "Internet
Based Fully Automated Online Trading System". The purpose of this document is to instruct
users on the functionalities of Order Management System that can be used to perform the
desired task using the system. Manual provide details step by step procedure of all
implemented functionalities in Order Management System.

5
1.5 Research Methods

1.5.1 Research Design

Research Design (RD) is a plan for the collection and analysis of the data. It presents a series
of guide posts to enable to researcher to progress in the right direction in order to achieve
the goal. The design may be a specific presentation of the various steps in the research
process. It is the overall operational pattern of framework of the project that stipulates what
information is to be collected from it will ensure that the information obtained is relevant to
the research questions and that it was collected by objectives and economical procedure.

This research has been used descriptive research design. It is a research design that is
developed with the aim of studying the subject of research in detail and explain the fact and
characteristics related to research problem. Descriptive research design include qualitative
research methods. A research which is conducted to interpret, analyze and obtain in-depth
knowledge of a subject is known as qualitative research. Qualitative research conducted
through questionnaire and interview method to acquire the relevant data about the research
subject.

1.5.2 Nature and Source of Data

Qualitative nature of data are collected through questionnaire and interview method. Most
of the data are used in this research are qualitative nature. Some quantitative data are
collected from secondary sources. This research include opinion of investors, brokers and
regulatory bodies’ officials. This report has been used primary and secondary data. The data
has been collected by researcher himself / herself as per the objective of the research is
known as primary data. Secondary data is research data that has previously been gathered
and can be accessed by researchers.

Data are collected from two sources. They are primary sources and secondary sources.
Primary data are collected through questionnaire, interview and observation method.
Secondary data are collected from various sources they are:

a. NEPSE and CDSC website.

b. Economic magazine, newspapers, and journals.
c. Various articles public’s in the newspaper.
d. Various publications dealing in the subject matter of the study.

6
1.5.3 Population and Sample
This research has been conducted on topic “Effectiveness of NEPSE Online Trading System
(NOTS)”. Its population is all the investor in security market, regulatory bodies’ officials
and broker firm. Purposive or judgmental sampling technique employed for selection of
sample. Purposive sampling is a method in which samples are selected by researcher based
on his or her judgement. From the total population 20 sample are selected. Out of 40 sample,
10 sample from investors and 10 sample from broker firm. Sample are selected randomly
from investor, broker firm and officials while collecting sample.

1.5.4 Data Collection Techniques

To gathering different information and fact secondary and primary data are used in the
report. Secondary data are collected from different economic news, NEPSE website and
office, CDSC website and office and different newspaper and news portal. The tools and
techniques to collection of primary data are as follows.

a. Questionnaire: It is a formal list of questions designed to gather response from

respondents on a given topic, issue or event. I have used questionnaire for investors
and broker firms for collection of their perception towards NEPSE Online Trading
System.
b. Interview: The data collection method where data are collected by asking questions
orally to the respondents is known as interview. The interview may be structured and
unstructured. I have taken interview of broker, investors, and regulatory bodies’
officials to collect data for my report.
c. Observation: A method of collecting data where researcher observe, analyses and
interprets the events or works personally is known as observation. I have analyzed
different news about NOTS, person’s opinions in interview in news and person’s
attitude towards NOTS.

7
1.5.5 Data Analysis Methods
I have used statistical tools for the purpose of analysis of data collected from questionnaire.
Some important descriptive statistical tools are used to achieve the objective of the study.
Statistics, which describes the data that have been gathered, are called descriptive statistic.
Such data are often in form of raw, unorganized numerical values. These statistics focus on
two aspects of the distribution: the central tendency and dispersion. Following are some
descriptive statistical tools that are used in this study.

i. Mean: A mean is average value or the sum of all observations divided by the number
of observation and it is denoted and given by the formula;
∑X
̅=
X
n
̅ = mean of the value, n= Number of the observation. During the analysis
Where, X
of data, mean is calculated by using the statistical formula “Average” on excel data
sheet on computer.
ii. Frequency: Frequency refers to number of repetition of variable or events or subject.
This technique is used when data is collected in nominal scale like male and female,
yes or no etc. This report also contain percentage of frequency. Frequency and
frequency of percentage were calculated by using "Mega Stat Add-in" on excel data
sheet on computer.

The collected data was in unorganized form. The appropriate data had been converted into
tabular and graphical form with the help of MS Excel and manually too. Scatter diagram,
pie-charts and bar diagram has been designed on the basis of data as per required. In order
to analyze the data, appropriate tools and techniques were used. Some descriptive statistical
tools like: mean, count, bar diagram, pie-chart, line chart have been used to analyses the
data. Excel program was extensively used to analyze and interpret data.

8
 CHAPTER - TWO
DESCRIPTIVE ANALYSIS

2.1 Data Presentation

2.1.1 Presentation of Questionnaire Data of Investors

A. Distribution of Respondent by Gender
As shown in Table 2.1, there 9 males and 1 female respondents are collected for data
analysis. Out of 10 respondents of investor, 90 percent are male 10 percent are female in the
study.
Table 2.1
No. of Respondents by Gender
Gender No. of Respondents Percent
Male 9 90.0
Female 1 10.0
Total 10 100.0

Figure 2.1 also clearly shows the distribution of respondents by gender.

Figure 2.1
No of Respondents by Gender

10%

90%

Male Female

9
B. Distribution of Respondents by Age
As shown in Table 2.2, 2 respondents fall in below 30, 5 in thirty to forty five, 3 forty five
to sixty respondents are collected for data analysis. Out of 10 respondents of investors, 20
percent fall under the age group of below thirty, 50 percent falls under the age group of 30-
45, 30 percent falls under the age group of 45-60 in the study.

Table 2.2
No of Respondents by Age
Age (Years) No. of Respondents Percent
Below 30 2 20.0
30-45 5 50.0
45-60 3 30.0
Total 10 100.0

Figure 2.2 clearly shows Distribution of Respondents by Age.

Figure 2.2
No of Respondents by Age
60

50

40

30

20

10

0
Below 30 30-45 45-60 60 & Above

No. of Respondents Percent

C. Distribution of Respondents by Academic Qualification

As shown in Table 2.3, there 1 respondents fall under plus two, 7 respondents fall under of
Graduate and 2 respondents fall under of Master and above respondents are collected for
data analysis. Out of 10 respondents, 10 percent falls under the plus two, 70 percent are of
graduate and 20 percent falls under the master and above in the study.

10
 Table 2.3
No. of Respondents by Academic Qualification
Academic Qualification No. of Respondents Percent
Plus Two Level 1 10.0
Graduate Level 7 70.0
Masters & Above 2 20.0
Total 10 100.0

Figure 2.3 clearly shows Distribution of Respondents by Academic Qualification.

Figure 2.3
No. of Respondents by Academic Qualification

10%
20%

Plus Two Level

Graduate Level

Masters & Above

70%

2.1.2 Presentation of Questionnaire Data of Stock Broker Offices

All broker office are currently provide access of NEPSE Online Trading System to their
clients. Each broker office have different number of NOTS clients. Following are the
distribution that shows the total number and NOTS user clients.

A. Distribution of Respondents by Total Number of Clients

As shown in Table 2.4, 3 respondents fall in 1,000-10,000 clients and 7 in 10,000-50,000
clients, respondents are collected for data analysis. Out of 10 respondents of broker office,
30 percent fall under 1,000-100,000 and 70 percent falls under 10,000-50,000 in the study.

11
 Table 2.4
No. of Respondents by Total Number of Clients
Total Client No. of Respondents Percent

1,000-10,000 3 30.0

10,000-50,000 7 70.0

Total 10 100.0

Figure 2.4 clearly shows Distribution of Respondents by Total Number of Clients.

Figure 2.4
No. of Respondents by Total Number of Clients

30%

1,000-10,000
10,000-50,000

70%

B. Distribution of Respondents by Number of NOTS User Clients

As shown in Table 2.5, 8 respondents fall in 100-1,000 NOTS clients and 2 in 1,000-5,000
NOTS clients, respondents are collected for data analysis. Out of 10 respondents of broker
office, 800 percent fall under 100-1,000 and 20 percent falls under 1,000-5,000 in the study.

12
 Table 2.5
No. of Respondents by NOTS Clients
NOTS Client No. of Respondents Percent

100-1,000 8 80.0

1,000- 5,000 2 20.0

Total 10 100.0

Figure 2.4 clearly shows Distribution of Respondents by Number of NOTS User Clients.

Figure 2.5
No. of Respondents by NOTS Clients

20%

100-1,000
1,000- 5,000

80%

2.2 Data Analysis

2.2.1 Analysis of Questionnaire Data of Investors

A. Gender and Effectiveness
As shown in table 2.6, male user are more than female user. Male user are more satisfy than
female user according to their average effectiveness. Both male and female are average
satisfy in this study. In both gender NOTS average effective.

13
 Table 2.6
Gender-wise effectiveness
Gender Average of Effectiveness Rounding Score
Male 3.805555556 4
Female 3.5 4
Grand Total 3.775 4

Figure 2.6 also clearly shows distribution of gender and average effectiveness.

Figure 2.6
Gender-wise effectiveness
3.85
3.8
Average effectiveness

3.75
3.7
3.65
3.6
3.55
3.5
3.45
3.4
3.35
3.3
Male Female
Gender

B. Age group and Effectiveness

As shown in table 2.6, there are three age group people are respondents in this research work.
In below 30 age group NOTS is higher effective than 30-45 and 45-60 age group. According
to table average effectiveness value of below 30, 30-45 and 45-60 age group is 4.25, 3.75
and 3.5 respectively out of five.

Table 2.7
Age group and Effectiveness
Age (years) Average of Effectiveness Rounding Score
Below 30 4.25 4
30-45 3.75 4
45-60 3.5 4
Grand Total 3.775 4

14
Figure 2.7 also clearly shows distribution of age group and average effectiveness.

Figure 2.7
Age group and Effectiveness

4.5
4
Average effectiveness

3.5
3
2.5
2
1.5
1
0.5
0
Below 30 30-45 45-60
Age (Years)

C. Academic Qualification and Effectiveness

As shown in table 2.8, there are three level of academic qualification respondents in this
research work. In graduate level respondents NOTS is more effective than plus two and
Masters level respondents. Most of the graduate level investors are user of NOTS. Plus two
level, graduate level and masters and above average effectiveness value are 3.5, 3.82 and
3.75 respectively out of five.

Table 2.8
Academic Qualification and Effectiveness
Academic Qualification Average of Effectiveness Rounding Score
Plus Two Level 3.5 4
Graduate Level 3.821428571 4
Masters & Above 3.75 4
Grand Total 3.775 4

Figure 2.8 also clearly shows distribution of academic qualification and average
effectiveness.

15
 Figure 2.8
Academic Qualification and Effectiveness

3.9

3.8
Average effectiveness

3.7

3.6

3.5

3.4

3.3
Plus Two Level Graduate Level Masters & Above
Academic Qualification

2.2.2 Analysis of Questionnaire Data of Stock Broker Offices

All respondents under this study are provider of NOTS service. All the respondents provide
NOTS service to their clients. Average effectiveness value of NOTS servicer provider is 3.4
that indicate effectiveness of NOTS for broker office is average. Broker are not fully satisfy
with NOTS due to many complaints from investor. Broker offices are agreed upon the
statements provided in questionnaire. We can show effectiveness of NOTS from following
distributions.

A. Total clients and Effectiveness

As shown in table 2.9, there are two group of number of client's broker office in this study.
In 1,000-10,000 client's broker office NOTS is more effective than 10,000-50,000 clients'
broker office. Average effectiveness value of 1,000-10,000 and 10,000-50,000 client's
broker office are 4.33 and 3 respectively out of five. Effectiveness of NOTS value in 1,000-
10,000 is higher than 10,000-50,000 client's broker office.

16
 Table 2.9
Total clients and Effectiveness
Total Clients Average of Effectiveness Rounding Score
1,000-10,000 4.333333333 4
10,000-50,000 3 3
Grand Total 3.4 3

Figure 2.9 also clearly shows distribution of total client's broker office and average
effectiveness.

Figure 2.9
Total clients and Effectiveness
5
4.5
Average effectiveness

4
3.5
3
2.5
2
1.5
1
0.5
0
1,000-10,000 10,000-50,000
Total clients

B. NOTS clients and Effectiveness

As shown in table 2.10, there are two group of number of client's broker office in this study.
In 1,000-5,000 NOTS clients' broker office NOTS is more effectiveness than 100-1,000
NOTS clients' 100-1,000 and 1,000-5,000 broker office average effectiveness value is 3.18
and 4.25 respectively out of five.

Table 2.10
NOTS clients and Effectiveness
NOTS Clients Average of Effectiveness Rounding Score
100-1,000 3.1875 3
1,000-5,000 4.25 4
Grand Total 3.4 3

17
Figure 2.10 also clearly shows distribution of NOTS client's broker office and average
effectiveness.

Figure 2.10
NOTS clients and Effectiveness
4.5

3.5
Average effectiveness

2.5

1.5

0.5

0
100-1,000 1,000-5,000
NOTS clients

C. NOTS save cost and Effectiveness

As shown in table 2.11, there are two types of broker office that answer NOTS save cost and
not. Average effectiveness value in NOTS save cost is higher than NOTS not save cost.
Effectiveness value of NOTS save cost and not are 3.43 and 3.37 respectively out of five.

Table 2.11
NOTS save cost and Effectiveness
NOTS Save Cost Average of Effectiveness Rounding Score

Yes 3.4375 3

No 3.375 3

Grand Total 3.4 3

18
Figure 2.11 also clearly shows distribution of NOTS save cost and average effectiveness.

Figure 2.11
NOTS save cost and Effectiveness

3.45
3.44
3.43
3.42
Average effectiveness

3.41
3.4
3.39
3.38
3.37
3.36
3.35
3.34
Yes No
NOTS save cost

2.2.3 Analysis of Secondary Data

Secondary data are obtained from NEPSE website to determine increasing trend of number
of NOTS users. Secondary data provides the actual number of user in different time period.
NEPSE publish number of NOTS user investors of each broker office. We have NOTS user
data from 2076-02-31 to 2076-05-12. This online user data available in NEPSE website.
NEPSE publish total number of NOTS user in weakly basis and broker wise.

As shown in table 2.12, NOTS user at 2076-02-31 was 8998. 2076-02-31 is the first time
NEPSE publish online user number after they launch NOTS. At 2076-05-12 NOTS user was
15100. NOTS user are not more in the Nepalese Security Market due to many reasons. NOTS
user may not increasing rapidly but NOTS user increasing in slow rate.

The table show the actual number of NOTS user at specific date. Due to unavailability of
more NOTS user data my prediction may not be matched. We can predict on the basis of
following data that the user is increasing day to day but not fast. This table show that actual
number of NOTS user till 2078-05-12 is 15100.

19
 Table 2.12
Total number of NOTS user investors
S.N Date Number of user

1 2076-02-31 8998

2 2076-03-05 9498

3 2076-03-12 11160

4 2076-03-19 11410

5 2076-03-26 11584

6 2076-04-02 11855

7 2076-04-09 12998

8 2076-04-16 13122

9 2076-04-24 13419

10 2076-05-12 15100

Figure 2.12 also shows that trend of online user clients. According to figure 2.12, online user
clients are increasing day to day. These data are obtained from NEPSE website. As shown
in figure 2.12 NOTS user information is published at 2078-02-31 first time. At that time
NOTS user number is 8998, after that NEPSE published NOTS user clients' number in
weakly basis. NEPSE publish NOTS user clients' number broker wise in their website.
According to 2076-05-12 data from NEPSE website total number of NOTS user is 15100.
As shown in figure 2.12 NOTS user clients' number in increasing trend but its user not
increasing as fast as, due to many reason. For more effectiveness of NOTS NEPSE need to
provide awareness and training program for investors.

20
 Figure: 2.12
Total number of NOTS user investor
16000

14000

12000
NUMBER OF USER

10000

8000

6000

4000

2000

DATE

2.3 Main Findings and Discussion

 Male are the major user of NEPSE Online Trading System. According to investor
questionnaire data most of the NOTS user are male. Out of 10 respondents only one
male are being the user of NOTS.
 Most of the NOTS user clients are fall in 30-45 years age group. It shows that most
of the young people are user of NOTS. 30-45 years age group investors are using
online trading system for their stock transactions. 50 percentage of total respondents
of NOTS user are fall in 30-45 years age group.
 Graduate level academic qualifications investors are more aware to NOTS and most
of the user of NOTS academic qualification is graduate level. 70 percentage of total
respondents of NOTS user academic qualification is graduate level.

21
 All the respondents are respond that NOTS save their time to make transactions.
NOTS user are satisfy with their feature but most of respondent complaints that
system is not working properly.
 According to investors respondents NOTS have many opportunity in Nepalese
security market. It can attract new investors. It can obtain foreign investment in
Nepalese security market.
 NOTS is more effective in graduate level academic qualification, below 30 years age
group and male rather than female.
 Every broker office are currently provide online trading system service to their
customers. All the respondents of broker office are provider of NOTS service.
Investors can easily get NOTS services from their respective broker firm.
 Most of the broker firm have 10,000-50,000 total clients. 70 percentage of
respondents of broker firm have total client 10,000-50,000. 80 percentage of
respondents of broker firm have total NOTS user clients 100-1,000, according to
stock broker office questionnaire.
 Broker office also agree in NOTS is better than previous trading system. Broker firm
face less pressure if investor use online trading system. They also comment to
improve NOTS to work properly. It need to fully develop for working properly.
 The main reason of NOTS user not increasing rapidly due to the system not working
properly and it is in developing phase. Anyway NOTS is moderate effective in
Nepalese security market. It is slowly effective in security market when investors are
aware to NOTS.
 To more effectiveness of NOTS NEPSE need to provide training and awareness
program to investors who have no idea about online trading system. NEPSE can use
online media, television, newspaper etc. to aware investors and provide training to
use online trading system.

22
 CHAPTER - THREE
SUMMARY AND CONCLUSIONS

3.1 Summary of the Findings

After conducting the study on “Effectiveness of NEPSE Online Trading System”, number
of different results was obtained. The study was conducted in different broker office's broker
and investors. Broker and investor responds are collected through questionnaire with the
objective of find out the effectiveness of NOTS and to access brokers' and investors'
satisfaction with NEPSE Online Trading System.

To access the effectiveness of NOTS 10 broker firm and 10 investors are selected for
collecting data for study. After collecting the data from Respondent, each data was entered
into the frequency and percentages of respondent’s attitude toward several queries were
calculated. Some of them were presented in the form of pie-chart, some in the form of table
and some in the form of bar-diagram.

Form the analysis of data we found that NOTS user are more male female are not many user
of NOTS as compare to male. NOTS is not fully developed system now so it take time to
increase NOTS user investors. NOTS user investors are not fully satisfied with its feature
investors are moderate satisfy with NOTS. NOTS is newly launched system so we are unable
to predict its effectiveness now. We can only give our opinion that its effectiveness level at
this time. At the present time it is moderate effective.

Male are the major user of NEPSE Online Trading System. According to investor
questionnaire data most of the NOTS user are male. Out of 10 respondents only one male
are being the user of NOTS. Male are more user due to the technological awareness. In
Nepalese security market male are more investors then female. It is also reason to NOTS
user are more male. We also found that more youngster investor are user of NOTS. This
study shows that 50 percentage of NOTS user investors are fall in 30-45 years age group. 20
percent fall in below 30 years age group and 30 percent fall in 45-60 years age group. So we
found that NOTS is more effective in young age group investors, due to young people are
more aware to internet. Old generation people are less user of NOTS because of they have
less knowledge of internet, email, websites etc.

23
Graduate level academic qualification investor are more user than other academic
qualification level investors. Study shows that NOTS is more effective in graduate level
academic qualification investor. Most of the NOTS user are graduate level. Investors are
more satisfy with NOTS because of is consume less time than previous trading system.
Investors responds that NOTS increase Nepalese security market transaction volume. NOTS
can also attract foreign investment in Nepalese security market. Due to the lack of internet
email knowledge of investor there is challenges for NOTS in Nepalese security market. Big
investors in Nepalese security market are old ages so there is more challenges to make fully
online trading system.

Questionnaire data result shows that average effectiveness in 1,000-10,000 total clients'
broker office have more than 10,000-50,000 total clients' broker office. Average
effectiveness in 1,000-5,000 NOTS user clients' broker firm have more than 100-1,000
NOTS user clients' broker firm. Most of the broker firm responds that NOTS save their
operating cost. They have less pressure than previous trading system.

3.2 Conclusions
To conclude this study shows that effectiveness of NEPSE Online Trading System is now at
moderate level. Most of the male are user of NOTS. So we can conclude that male are more
satisfy and NOTS is more effective in male than female. Most of the NOTS user clients are
fall in 30-45 years age group. It shows that most of the young people are user of NOTS. 30-
45 years age group investors are using online trading system for their stock transactions. 50
percentage of total respondents of NOTS user are fall in 30-45 years age group. The primary
objective of this research is to access satisfaction of investors and broker firm in NOTS.
After research work we fund that investors are average satisfy with NOTS feature but they
comment that the system is not working properly it stop while investors want to provide
order. Non user of NOTS investors comment that they also want to use NOTS but they are
not use that system before NEPSE won't improve their online trading system. They need
properly working system for their transaction. NOTS is average effective in Nepalese
security market within short period of time. So we predict that NOTS will be more effective
in Nepalese security market after the system will fully developed and it will work properly
as per the user instruction.

24
From broker point of view, NOTS is better than previous trading system. It attract more
investors in security market. Broker are also average satisfy with NOTS. They need fully
automated NOTS that will be directly connected with investors' Demat account and bank
account that directly clearing transactions. NOTS only provide order to broker that is
instructed by investors. Investors need to go broker office to complete financial transaction.
NOTS only provide order to buy and sell security to broker office it cannot collect money
and payment due amount through online. It cannot complete full transaction through online.

NEPSE publish online user manual in their site through which NEPSE provide awareness to
operate NOTS. Regulatory bodies told that they are providing full information regarding
NOTS to investor and this system is better than previous system. NEPSE also publish one
video tutorial for investors to know how NOTS work and how investors can use in their
website. NEPSE General Manager Chandra Singh Saud said they launched NOTS as one of
the components of the modernisation of the stock trading system. According to him, Nepal's
residing abroad will also be able to trade stocks using the NOTS. “If interconnectivity is
established among the clearing banks, it will allow fund transfers and investment in the
Nepali stock exchange by foreigners too.” Bharat Ranabhat, president of the Stock Brokers
Association of Nepal, said online stock trading would not take full shape until an online
payment settlement system is established. “Although investors can buy and sell shares from
their place, they still need to visit their broker’s office to complete financial settlement.”

Nepal's capital market is still very small and the volume of transaction hasn't picked up the
pace yet. If we look closely, the large portfolio holders are above the age of 50 and majority
of them still find it difficult to use tech-based systems. Some still like to take print outs
before making a buying or selling decision. On the other side of the road, are the youngsters
like me who are receptive to tech-based innovations but alas! Very few resource to utilize.
So unless and until a balance is established, it is hard to expect drastic change in the market
situation. We have to give time for this equilibrium to be achieved. As the generations pass
down, the user acceptability will increase and so will the user-friendly-ness of the online
trading system. The era of online trading system has just begun and it's true that it is far from
perfect. But we can persuade NEPSE to work on it tirelessly by continuously reminding
them and giving them feedback on how the system can be made better.

25
3.3 Recommendations
Analysis of questionnaire respondents of investors and broker firm. They comment on NOTS
and also provide suggestion for improvement of NOTS. I have also found many suggestion
or recommendation from anysis of data and interview of different investor, broker and
regulatory bodies officials. Some recommendation are listed below.

 Investors comment that they are facing system is not working properly as per
instruction. So NEPSE need to take this issue seriously and improve their online
system so it work as per instruction of user.
 Large number of investor are not aware of online trading system. NEPSE also
published videos and manual in their website but it is not able to aware people who
lives out of valley. So NEPSE need to launch special training program to aware
people.
 NOTS is not fully online system for better market. It is not complete and sufficient
bank integration is not completes yet. So NEPSE integrate NOTS with banking
system and direct connect with Demat.
 NOTS system has many bugs, inactive in few minutes, it is not mobile friendly and
can't be used on all types of browsers. So it need to improve to overcome these errors.
 NOTS only post order for buy and sell. Online payment settlement system is
necessary for making fully online trading system.
 NEPSE need to integrate NOTS with Demat and Bank to reduce transaction clearing
time and online payment of due amount without going to broker office that save
investors as well as broker time.
 NEPSE need to establish interconnectivity among the clearing banks, it will allow
fund transfers and investment in the Nepali stock exchange by foreigners too.

26
 BIBLIOGRAPHY

Adhikari, D. R., & Pandey, D.L. (2016). Business Research Methods. Kathmandu, Nepal:
Asmita Books Publishers & Distributer (P) Ltd.

Company, YCO. (2018). Order Management System User Manual: Internet Based Fully
Automated Online Trading System. Kathmandu: NEPSE.

Dhimal, B. K. (2009). IPO Management and Capital Market. Kathmandu, Nepal: A Summer
Project Report Submitted to Pokhara University.

Nepal Stock Exchange. (2019, October 28). Number of Online User and History of NEPSE.
Retrieved from NEPSE Website: http://www.nepalstock.com/about-us/introduction

A Staff Reporter. (2018, July 2). Online trading begins at NEPSE. Retrieved from The
Raising Nepal Website: http://www.therisingnepal.org.np/news/32628

The Kathmandu Post. (2018, November 7). Nepse Online Trading System goes live.
Retrieved from https://kathmandupost.com/money/2018/11/07/nepse-online-
trading-system-goes-live

My Republica. (2018, Jun 24). Automated online trading system from July 17. Retrieved
from https://myrepublica.nagariknetwork.com/news/automated-online-trading-
system-from-july-17/

Shrestha, Raju (2007). An Analysis of Different Aspect of IPO and Its practices in Nepal.
Master diss, Tribhuvan University.

Shrestha, Suraj K. (1996). A Study on the Public Response to Primary Issue of Share in
Nepal. Master diss. Tribhuvan University.

Khadka, S. (2016). Rural Marketing Strategies Adopted by Chaudhary Group. Kathmandu,

Nepal: A Project Report Submitted to Pokhara University.

Shrestha, M.K., Bhandari, & D.B. (2007). Financial Markets & Institutions. Kathmandu:
Asmita Publication.

Thapa, K., & Parajuli, B. (2011). Financial Institutions & Markets, Kathmandu: Januka
Publication.
27
 APPENDICES
Appendix - I

Questionnaire for Investors

“Effectiveness of NEPSE Online Trading System (NOTS)”

Dear Sir/Madam,
My name is Rajesh Kumar Singh. I am here to collect data for my research study. This study
is being conducted as part of partial fulfillment of Bachelor of Business Administration
(BBA).The questionnaire is prepare to analyze the Effectiveness of NEPSE Online Trading
System. You are kindly requested to fill the questionnaire with your own views. The
information provided by you will be kept as strictly confidential.

1. Please, tick (√) in the blank box.

1.1. Gender: Male Female

1.2. Age (Years): Below 30 30-45 45-60 60 & Above

1.3. Academic qualification: Below Plus Two Level Plus Two level
Graduate Level Masters & Above

1.4. User of Online Trading System: Yes No No idea

1.5. NOTS saves your time? Yes No No idea

1.6. Your transaction volume through NOTS (Monthly): Below 50,000

50,000-100,000 100,000-1,000,000 1,000,000 & Above

28
2. Please, encircle [O] in a number that indicate your indicate your level of agreement or
disagreement for each of the following statement, where 1 for strongly disagree (SD), 2
for disagree (D), 3 for fairly agree (FA), 4 for agree (A), and 5 for strongly agree (SA).

S.N. Statement SD D FA A SA
1. NOTS is user friendly and easy to use. 1 2 3 4 5
2. NOTS is better than previous trading system. 1 2 3 4 5
3. NOTS helps to increase your transaction volume. 1 2 3 4 5
4. NOTS can attract new investors in stock market. 1 2 3 4 5

3. Give your opinion towards NEPSE Online Trading System. (You can also write any
suggestion or comment to improve Online Trading System.)
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
…………................

Respondent,
Signature: …………………………………..
Date: …………………………………………..

*****Thank you for your time to answer the questionnaire*****

29
Appendix - II

Questionnaire for Stock Broker Office

“Effectiveness of NEPSE Online Trading System (NOTS)”

Dear Sir/Madam,
My name is Rajesh Kumar Singh. I am here to collect data for my research study. This study
is being conducted as part of partial fulfillment of Bachelor of Business Administration
(BBA).The questionnaire is prepare to analyze the Effectiveness of NEPSE Online Trading
System. You are kindly requested to fill the questionnaire with your own views. The
information provided by you will be kept as strictly confidential.

4. Please, tick (√) in the blank box.

1.1 Provider of NOTS service: Yes No

1.2 Number of total clients: Below 1,000 1,000-10,000 10,000-50,000

50,000 & Above

1.3 Number of NOTS User Clients: Below 100 100-1,000 1,000-5,000

5,000 & Above

1.4 Total transaction volume (Daily): Below 1 Crore 1 Crore-10 Crore

10 Crore-50 Crore 50 Crore & Above

1.5 Total transaction volume through NOTS (Daily): Below 1 Crore 1 Crore-10 Crore
10 Crore-50 Crore 50 Crore & Above

1.6. NOTS saves your any costs? Yes No

30
5. Please, encircle [O] in a number that indicate your indicate your level of agreement or
disagreement for each of the following statement, where 1 for strongly disagree (SD), 2
for disagree (D), 3 for fairly agree (FA), 4 for agree (A), and 5 for strongly agree (SA).

S.N. Statement SD D FA A SA
1. NOTS user increasing rapidly. 1 2 3 4 5
2. NOTS is better than previous trading system. 1 2 3 4 5
3. NOTS helps to increase your net profit 1 2 3 4 5
4. NOTS can attract new investors in stock market. 1 2 3 4 5

6. Give your opinion towards NEPSE Online Trading System. (You can also write any
suggestion or comment to improve Online Trading System.)
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
……………………………………………………………………………………………
…………................

Respondent,
Signature: …………………………………..
Date: …………………………………………

*****Thank you for your time to answer the questionnaire*****

31