The Nepal Securities Board (SEBON) has unveiled its new capital market policy for the fiscal year 2083/84, outlining plans for significant reforms across legal, technical, and institutional structures.
SEBON aims to transform the capital market from being limited to traditional share trading into a productive, technology-friendly financial system aligned with international practices. This ambitious policy seeks to bring wide-ranging improvements to the market’s legal, technical, and institutional frameworks.
Strengthening Legal and Regulatory Frameworks
As part of the policy, the Board will prepare drafts for the Nepal Securities Board Act, the Securities Market Management and Offenses and Punishment Act, and a Trustee Act in the coming year. These laws are intended to standardize the capital market’s regulatory structure to meet international benchmarks.
Expanding Investment Opportunities
To broaden investment avenues, SEBON plans to introduce new financial instruments such as Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and Exchange Traded Funds (ETFs). Additionally, it will work on developing a Commodity Exchange for the organized trading of agricultural products and other goods. The policy also includes laying the groundwork for a hedging system and developing essential infrastructure to facilitate secondary market trading of government, municipal, and institutional bonds.
Ensuring Investor Protection
For investor protection, the Board will implement effective monitoring and auditing to ensure that listed companies use funds collected through IPOs as per their prospectus. A national investor education campaign will be run across the country. SEBON will also coordinate with relevant bodies to incorporate capital market topics into school and university curricula. A ‘zero tolerance’ policy against insider trading and market manipulation will be strictly enforced.
Embracing Technology for Market Development
Prioritizing technology, the Board announced to implement a Regulatory Sandbox to test innovations like blockchain and smart contracts. It plans to develop a market surveillance system based on Artificial Intelligence (AI) and Big Data analysis. Furthermore, a Financial Computer Emergency Response Team (Fin-CERT) will be established to strengthen capital market’s cyber security.
Boosting Foreign and Institutional Investment
To expand foreign and institutional investment, a Qualified Foreign Institutional Investor (QFII) Framework will be prepared. The policy also outlines necessary facilitation to increase participation from institutional investors like the Employee Provident Fund (Karmachari Sanchaya Kosh), Social Security Fund (Samajik Suraksha Kosh), and Citizen Investment Trust (Nagarik Lagani Kosh).
Professional Development and Research
The policy will introduce a professional certification system for personnel working at brokers, merchant banks, and other securities businesses. A Capital Market Research and Policy Institute (CMRPI) will be set up for capital market studies, research, and capacity building. Rules for investment consulting and research analysts will also be drafted to organize investment advisory services.
AI Disclaimer: This article was originally published on https://bajarkochirfar.com. It has been translated with the help of AI. For the best understanding and accurate facts, we recommend reading the original Nepali version.
