Continue with Google
KATHMANDU, June 12: The study panel has recommended the government to license a new stock exchange only after restructuring of the existing Nepal Stock Exchange (NEPSE).
The study panel formed under the then Deputy Governor of Nepal Rastra Bank (NRB) Chintamani Shiwakoti has come up with the report underlining the need for a new stock trading platform, along with revising share structures in the NEPSE. The Securities Board of Nepal (SEBON) had formed the panel last year.
The panel has suggested the government to offload 30 percent of NEPSE to the general public. Currently, NEPSE has a paid-up capital of Rs 1 billion, with the government owning 58.66 percent. Rastriya Banijya Bank holds 11.23 percent, the Employees' Provident Fund holds 10 percent, NRB holds 9.5 percent, Laxmi Sunrise and Prabhu Bank each hold 5 percent and stockbrokers hold 0.6 percent of the shares.
Nepal's Stock Market Shake-Up: Is a New Exchange Necessary?
The report submitted to the SEBON has highlighted the contribution of the secondary market in increasing the size of securities trading, increased investment, employment generation and increase in government revenue collection. “The competition in the secondary market could aid in economic development via mobilization of medium-term and long-term capital in the country,” reads the report.
The panel has also stated that the opening of a new stock exchange could help remove the conflict of interest of the regulator and government-operated trading platform, while it will help maintain the fundamental principle of power balance and regulation. It has recommended the government to permit a new stock exchange to be operated by the private sector.
The new company must have a minimum paid up capital of Rs 3 billion, along with specialized experience and professional skills of the securities exchange market, and ability to diversify the instruments of the new stock exchange.
The newly authorized securities exchange should ensure that it has the ability to use technology used at the international level, including full automation. The quality, effectiveness, reliability and technical aspects of the trading system should be tested by an authorized body. An automated electronic trading system must be recognized for trading operations or comply with international standards, including application programming interfaces and investor apps, should be established.
Amid controversies on whether or not to license a new stock exchange market, the SEBON has unveiled the report almost after a year since the panel was formed.
