Invitation for Submission of Expressions of Interest

Project Name: Loan No. 1811-NEP: Corporate and Financial Governance

Project:Nepal Capital Market Development
Loan No:Loan No. 1811-NEP
Financing:Asian Development Bank
Sector:Information Technology
Abstract:System to Automate Trading of Equity and Debt Securities
Abstract:System to Automate Trading of Equity and Debt Securities
Deadline:20 August 2005
Notice Type:Request for information/Invitation for Expression of Interest
Client:Nepal Stock Exchange (NEPSE)

His Majesty's Government of Nepal (HMGN) has obtained a loan from the Asian Development Bank (ADB) to strengthen Nepal's capital markets. Part of the proceeds of this loan will be applied towards the acquisition of a system to automate the trading of securities on the Nepal Stock Exchange (NEPSE).

The Aries Group, Ltd. has been retained under an Asian Development Bank technical assistance project to advise NEPSE on the selection of a suitable system to automate trading. The purpose of this Request for Information (RFI) is to solicit information from firms capable of providing such a system in order to draw up a short list of qualified vendors. After assessment of the responses to this RFI, bidding documents shall be issued to short-listed firms.

Background

The Nepal Stock Exchange (NEPSE) is contemplating the acquisition of a system to automate the trading of equity and eventually debt securities. Presently, only equity securities are traded. Trading is currently conducted via "open outcry" on the floor of the exchange. The automated system is intended to replace the "open outcry" method of trading.

Overview of System Requirements

Securities - Securities (equities and debt) listed on the NEPSE will be eligible for trading through the system. The system offered must also be capable of trading eligible government securities. Although at the present time Nepal does not have a Central Securities Depository (CSD), the Trading System offered must be capable of interfacing with a CSD System.

Currency - All trading activities will be transacted in Nepalese Rupees. In the future all trades executed via the NEPSE Trading System will be required to be communicated to a CSD System.

Participants - All NEPSE trading members, unless suspended, will be eligible to trade via the Trading System offered. Other parties, e.g. banks and institutional investment firms, may be permitted to report trades in government securities to the system.

Language - All users must be able to read English and the system must operate in the English language.

Volumes Current Fiscal Year 2004/5Anticipated by Fiscal Year 2009/10
 Trading Participants27100-120
 Listed Companies125250-300
 annual Transactions105,000500,000-1,000,000

Hardware and Communications - It is envisioned that workstations will be placed on the floor of the exchange for use by trading members. These workstations would use a Local Area Network (LAN) and be connected to the trading engine. One or more supervisory workstations should also be available to NEPSE staff to enable them to:

  • Enter new listings
  • Update calendar records
  • Update securities and members' details

Note: The proposed system must interface with the present settlement and clearing system.

Trading - Trading members would enter orders to buy and sell securities into the system via workstations. These orders would be routed to the trading engine, which would match them on a price/time priority basis, issue trade confirmations and route trade confirmations back to the trading floor. Trade confirmations would be displayed on appropriate workstations and trade confirmation notices would be printed on the NEPSE trading floor for participants.

Trade Reporting - When government securities are included, the system must support trade reporting by institutional firms as well as OTC phone-based automated trading by brokers.

Clearing - All payments will take place in Nepal through a settlement account maintained by NEPSE. Buyers will be required to pay before the securities settlement day (T+3). NEPSE will suspend the settlement of any transaction where payment has not been received. NEPSE will transfer funds to sellers after the successful settlement of securities either on the evening of T+3 or T+4 (for equities), depending on the timing and T+0 (for debt securities). It must be noted that currently physical security certificates must be presented to complete settlement.

Settlement - The trading system offered must have the capacity to route trades to a central securities depository. Settlement of securities should take place:

  • On a trade for trade basis
  • Free of payment
  • On the basis of rolling settlement on T+3
  • On the basis of netting

Note: NEPSE must have the ability to suspend settlement of securities where the buyer has not paid.

Information Requested

If you are interested in being short-listed to offer the above mentioned system, please provide the following information when responding to this RFI:

General

  • Brief description(s) of your system (architecture/design of both hardware and software)
  • List of sites (exchanges) where your system is presently in use with user references at each
  • The volume of trading your system can support
  • An indication of the level of cost (a range is acceptable) for your system

Note: It is not envisioned that a turnkey solution costing greater than US $300,000 would be acceptable.

Hardware and Software
  • Computer language in which the application is written
  • Specifications of the workstation and central server(s)
  • Back up arrangements
Trading
  • Description of the basis on which your system matches orders
  • Description of the manner in which the trading system supports trade reporting
  • Description of the types of order types supported by the system

Expressions of interest, along with details of experience and qualifications for this assignment must be sent to the e-mail address provided below or by express international courier to the address below no later than 20 August 2005.

Mr. Anthony B. Shoraka, International Project DirectorTel.:+ 1 240 223 1300
Corporate and Financial Governance ProjectFax:+ 1 240 223 1301
c/o The Aries Group Ltd.
4905 Del Ray Ave, Suite 210, Bethesda, MD 20814, USA
E-mail: ashoraka@ariesgroup.com