KATHMANDU, May 16: Securities Board of Nepal (Sebon) has decided to add a new stock exchange company to foster competition in the secondary market.
The decision is a part of the capital market regulator's reform initiatives that also include modernization of stock market and plan to attract more real sector companies to list their shares in the stock exchange, among others.
Sebon officials say that the decision to open licensing for a new stock exchange company is aimed at breaking the monopoly of the government-owned stock exchange company -- Nepal Stock Exchange (Nepse) -- and promote competition.
The board meeting of the capital market regulatory authority held last week decided in principle to license a new stock exchange company. So far, Nepse is the only bourse in the country where securities, mostly shares of public companies, change hands. The government owns 58 percent of shares in Nepse, while Nepal Rastra Bank (NRB), brokerage firms and other members of Nepse hold the remaining shares.
“The meeting of the board has decided in principle to move ahead with the process to add a new stock exchange company. With an additional stock exchange company, the board believes that there would be competition in the capital market which will provide more efficiency and liquidity for investors,” Niraj Giri, an executive director of the Sebon, told Republica.
He, however, said that the board was still holding discussion over the modality and other nitty-gritty of introducing the new stock exchange company like starting the process, how to call applications, and whether to issue license through competition or license companies which have already registered application.
“The size and scale of the economy has increased in recent years and so has the number of investors. The board decided to bring a new stock exchange company concluding that a new stock exchange company will not only foster competition, but will also make the market technically sound and efficient ,” Giri, who is also the spokesperson for the Sebon, said.
He, however, did not say when the new stock exchange company would come into operation.
This is not the first time that Sebon is taking an initiative for adding a new stock exchange company.
Himalayan Stock Exchange, National Stock Exchange, Nepal Securities and Derivative Exchange, and Kathmandu Stock Exchange had applied for the license to operate stock exchange nearly a decade ago.