KATHMANDU, Feb 8: The government has stepped up efforts to install a new stock exchange market neglecting its own plan to restructure the existing Nepal Stock Exchange (NEPSE) The government had envisioned the plan to restructure NEPSE about one and a half decades ago.
The government had announced the plan to expedite the process of privatization of NEPSE in the budget speech of the Fiscal Year 2010/11. In 2015, the government commissioned a taskforce to provide suggestions on restructuring NEPSE amid calls for privatization of the only stock exchange platform of Nepal. The consultant advised the government to privatize NEPSE to bring efficiency in the market.
As the privatization process remained disappointingly slow, the Securities Board of Nepal (SEBON), the sector’s regulator decided to add a new stock exchange company for promoting competition in the market. Two weeks ago, the government gave approval to the SEBON to materialize its plan to open a new stock exchange company.
Dissatisfied by the government decision, the NEPSE Employees Association (NEA) has called for the appointment of a chief executive officer (CEO) who will be capable of restructuring the NEPSE, while making it more competitive as the current CEO’s term nears its end. “Within the limitations of the existing structure, the NEPSE will be unable to compete with the new stock exchange company,” said an official of NEPSE.
The three-year tenure of CEO Krishna Bahadur Karki, appointed during the tenure of then-Finance Minister Janardan Sharma, is set to expire on February 7. The NEA in this regard has urged the Ministry of Finance (MoF) to select a candidate with the necessary knowledge, skills and professional competence in the capital market, someone ethical, committed to its development, capable of protecting investor interests and leading NEPSE’s restructuring efforts.
The government owns 58.66 percent stake in the NEPSE. According to NEPSE, it has assets worth Rs 14 billion while its paid up capital is Rs 1 billion. Apart from the MoF, Laxmi Sunrise Bank, Prabhu Bank, Rastriya Banijya Bank, Employee Provident Fund and Nepal Rastra Bank are among its stakeholders.
After the government’s go ahead, the SEBON has started the process to handpick one of the three companies—Himalayan Stock Exchange, National Stock Exchange of Nepal, and Annapurna Stock Exchange Limited—that have submitted applications.
“Provided the new company gets an operating license, NEPSE might lose its business as the listed companies could start trading from a new entity. Likewise, the privatization of NEPSE might not be effective thereafter,” said the NEPSE official.