The government has appointed Santosh Narayan Shrestha as the chairperson of the Securities Board of Nepal (SEBON) almost 11 months after the position became vacant. Shrestha secured the position, leaving behind SEBON’s Executive Directors Mukti Nath Shrestha and Nabaraj Adhikari, who were also in the race. A committee formed under the Vice-chairperson of the National Planning Commission, Shiva Raj Adhikari, shortlisted these three candidates for the position. SEBON was left without a chairperson after the tenure of its former Chairperson, Ramesh Hamal, ended on January 6, 2024. Although the government formed a number of committees subsequently, the appointment process could not be finalized due to a lack of consensus at the political level. With the prolonged delay, most of SEBON's activities, including public offerings, have been adversely affected. While the delay has been costly, Shrestha’s appointment is a welcome step forward. We look forward to seeing him address the pressing challenges in Nepal’s stock market sector.
As Shrestha assumes office as the head of the regulatory body of Nepal’s stock market sector, there are many things on his plate. Several dozen companies are waiting for his approval to go to the market. The first priority of his tenure should be to clear this backlog. The stock market has failed to gain the confidence of potential investors due to a lack of policy stability. Likewise, insider trading is rampant, and unscrupulous elements within the stock market have been able to manipulate the prices of various stocks. The inability of SEBON to check such foul practices has caused a large number of investors to fall victim to these activities. The failure of SEBON to rein in the stockbrokers is equally serious, as it has made sellers unable to receive their payments on time. The onus lies on the new SEBON chief to address all the anomalies seen in the stock market and make it stable and predictable.
Understanding Stock Market
The country’s stock market is often regarded as a barometer of the country’s economy. A vibrant stock market instills confidence among potential investors, encouraging both domestic and foreign investment. As Nepal is looking for investments both from home and abroad, the first priority of the new SEBON chief should be to ensure healthy growth of the stock market, addressing the existing anomalies seen in this sector. This requires strengthening the monitoring mechanism and conducting on-site inspections on a routine basis. SEBON also needs to work towards strengthening additional tools such as bonds, mutual funds, and other credit instruments to make the market more vibrant. As the head of the regulatory body, the newly appointed chief must be able to take action against unscrupulous companies and stockbrokers, as well as those involved in insider trading, without fear or favor. Additional policy measures must be in place to stop insider trading and the practice of artificially raising stock prices. Only then can Nepal’s stock market earn public trust. Whether the new SEBON chief can deliver on these tasks depends largely on his ability to withstand or resist undue political and bureaucratic pressure. We extend our best wishes as he undertakes these critical challenges to guide Nepal’s stock market toward a stable and progressive trajectory.
