KATHMANDU, Dec 22: The government has decided to open a new stock exchange market amid ongoing controversy.
The cabinet meeting held on Thursday gave the go ahead to the Securities Board of Nepal (SEBON) to issue a license to the new stock exchange market. With the government’s decision, Nepal will soon be getting a second stock trading platform.
Currently, the Nepal Stock Exchange (NEPSE) that started its secondary market operation on January 13, 1994, has been working as an entity and a frontline regulator in the segment. The NEPSE upgraded share trading through an online system on November 6, 2018. There have been calls for a second institution to carry out stock trading citing a growing prospect of the secondary market inside the country, according to an official at the SEBON.
The issue of opening the new stock trading has courted controversy since the SEBON on September 18, 2022, announced to issue a new stock exchange. The sector’s regulator had to halt the process after a case was filed at the Supreme Court against the SEBON’s decision.
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Likewise, the then Prime Minister Pushpa Kamal Dahal in April 2023 also halted the process of giving license to the new stock exchange. Earlier in January 2023, the government formed a panel headed by Former Deputy Governor of Nepal Rastra Bank Chinta Mani Siwakoti to study the rationale behind the second stock exchange in the country’s secondary market. The committee suggested the government restructure NEPSE along with keeping the option open to set up a new stock exchange.
The committee also stated that the opening of a new stock exchange will protect the interests of investors who invest in securities by making the secondary market more competitive, efficient, investor-friendly, and compatible with international level technology. It also recommended the possibility of incorporating foreign strategic partners in the country’s stock exchange.
The controversy erupted after the government showed interest to issue license to the aspirant who had close connections to the ruling parties. As a result, the government failed to appoint the chairperson of SEBON on time as the vital post remained vacant for about 11 months.
The government stepped up efforts to open the new stock exchange after the parliamentary Finance Committee gave the green signal to the government on November 9 to take forward the process.
Rewat Bahadur Karki, former chairman of the SEBON, told Republica that the opening of a new stock exchange will provide investors with more options to carry out their stocks trading. “As the government has failed to privatise the NEPSE, a new stock exchange could help make the secondary market more competitive.”
Krishna Bahadur Karki, chief executive officer of the NEPSE, however said there is no need for the second institution in the stock exchange if the NEPSE is properly restructured.
“The restructuring could help NEPSE introduce new market instruments like intraday trading of shares, short selling, auction market and derivatives, among others,” said Karki.
