KATHMANDU, Oct 9: The Ministry of Finance (MoF) has directed the line government agencies to implement recommendations of a four-member task force formed to study the prospects of strengthening the performance of Nepal’s secondary market.
Following the market crash on the first trading day after the Gen Z movement of September 8-9, Finance Minister Rameshore Khanal formed a four-member task force to recommend systemic and procedural reforms aimed at restoring investor confidence. The panel is coordinated by Rupesh KC, acting executive director of the Securities Board of Nepal (SEBON) and also includes Sharan Adhikari, director at Nepal Rastra Bank; Niranjan Phuyal, acting executive director of Nepal Stock Exchange (NEPSE); and Sharad Niraula, under-secretary at the MoF.
SEBON endorses work plans to implement govt’s suggestions over...
According to a MoF official, the ministry on Wednesday issued circulars to the SEBON, NEPSE and related government offices to enforce the suggestions given by the study panel. The panel has proposed over three dozen measures, including 15 short-term, 15 medium-term, and seven long-term recommendations. Key suggestions include annulling the threshold on loans against shares, extending deadlines for interest payments on margin loans, and reviewing capital gains tax provisions.
In short-term measures, the panel has suggested removing the Rs 250 million ceiling on individual margin loans and extending the deadline for interest payment by three months from mid-October. Additional recommendations include immediate implementation of margin lending through stock brokers, developing the NEPSE index as a benchmark for the All Equity Index and Free Float Shares, allowing investors to open more than two demat accounts, establishing mechanisms to address investor grievances, and ensuring timely settlement of liabilities by brokers.
Medium-term measures, to be implemented within one year, include restructuring NEPSE, developing a separate exchange mechanism for small and medium-cap companies, and regulating pre-IPOs, including capital collection processes for public limited companies. The panel also recommended policy clarity on non-resident Nepali investments in foreign currencies, operationalizing the settlement guarantee fund and auction market, effective implementation of the book-building mechanism, setting standards for issuing primary and rights shares, and licensing subsidiaries of insurance companies to operate as stock traders.
For long-term measures beyond one year, the panel suggested introducing separate laws for stock exchange operations and regulation. The report also called for new investment tools, including intraday trading, short selling, equity derivatives, securities lending and borrowing, and provisions to strengthen the bond market.
