Finance Committee asks authority concerned to proceed with licensing process for controversial new stock exchanges

Published On: November 11, 2023 09:31 PM NPT By: Republica | @RepublicaNepal

The parliamentary committee’s inconsistent decision has been alleged for suspected financial irregularities

KATHMANDU, Nov 11: The Finance Committee under the House of Representatives has instructed the authority concerned to proceed with the license process of the new stock exchange.

The parliamentary committee gave its fresh new decision amid the ongoing controversies on the issue. It has been more than one year since the Securities Board of Nepal (SEBON) asked for an application for the stock exchange. The license process was stopped by the order of the Supreme Court (SC) before the deadline for the application was initially requested. The last time, the license process was stopped by the board of directors of SEBON after the directive of the Prime Minister in May and the directive of the Finance Committee on June 12.

However, Committee member Metmani Chaudhary said that the meeting of the Finance Committee held on Friday gave instructions to proceed with the license process of the new stock exchange. He said that the SC's order has clarified that a new stock exchange is needed on the basis of competition and quality, and to end the monopoly. He said the committee decided to give instructions to proceed with the licensing process in line with the spirit of the SC order.

On September 18, 2022, the SEBON called for applications for licenses of stock brokers, commodity exchanges and stock exchanges. The board had called for applications with a deadline of 45 days for the stock exchange and 35 days for the stock broker.

After the expiry of the deadline for applying for stock brokers and after the SC's short-term interim order, on October 21, 2022, the SEBON suspended the applications for stock exchange and commodity exchange.

The writ filed in both the single bench and the constitutional bench of the SC was dismissed saying that the revised regulations of the SEBON were in accordance with the Act. Along with this, the board called for applications on April 13, 2023, keeping a deadline of 10 days for re-application. According to the notification, Himalayan Stock Exchange, National Stock Exchange of Nepal and Annapurna Stock Exchange Limited applied for the new stock exchange.

After the SEBON formed an evaluation committee for the license of the stock exchange and took the process forward, the meeting of the Council of Ministers on May 9, 2023 discussed stopping the license process of the stock exchange. Accordingly, following the instructions of the government, the SEBON ordered it to stop the license process of the stock exchange.

In a series of controversial decisions by the government bodies, the Finance Committee under the House of Representatives also entered into the issue of the license of the new stock exchange. The meeting held on May 16 of the Finance Committee had sent a letter to the SEBON on May 21 asking them to stop the stockbroker and stock exchange license application and to submit an answer to the committee within 5 days.

The committee meeting held on June 12, 2023 instructed the Ministry of Finance and the SEBON to stop until a detailed study is completed by the Stock Exchange License Procedure Committee. About five months after giving instructions to stop the stock exchange license process, the committee has given instructions to proceed with the process.

Meanwhile, the lawmaker Swarnim Wagle wrote a note of dissent expressing his disagreement on the parliamentary committee decision on Friday. “The Finance Committee seems to have taken an ad hoc decision without thoroughly reviewing the previous study and not following due process in this regard,” reads the note of dissent forwarded by Wagle.