KATHMANDU, July 28: Although government authorities have long been toying with the idea of operating a commodity exchange, it is yet to be materialized.
On Thursday, the Securities Board of Nepal (Sebon) once again floated the idea of running a commodity exchange. Speaking at a progra, Sebon Chairman Ramesh Kumar Hamal said they will call for applications from interested firms soon after necessary policies are formulated and structures supportive of the idea are put in place.
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Hamal said Sebon has been working on bylaws related to warehouse, commodity brokerage and traders, market maker and transaction settlement and clearance.
The country got the first Commodities Exchange Market Act endorsed by the Legislature-Parliament on July 31, 2017. In November of the same year, Sebon announced providing permission to commodity traders to invest in six types of goods on the commodities exchange: agricultural products, metals, precious metals, mineral oils, edible oils and others.
Though the Act came online, the sector’s regulator has been dilly-dallying to chalk out the related regulations and bylaws, affecting the implementation of the much talked-about commodity exchange in the country. In the absence of proper laws and lack of monitoring, many firms are found to be working in the sector illegally.
Basu Khanal, an analyst of the commodity exchange market, said the lack of strong commitment from the sector’s regulator has led to the slow growth of the commodity market. According to him, lack of financial literacy and relatively poor technology development in the segment have also hindered its promotion.
