The Securities Board of Nepal (SEBON) has initiated the process of introducing margin lending, securities lending and borrowing, and short selling in the Nepalese capital market by publishing a detailed consultation paper for public feedback.
SEBON is preparing to start modern securities financial services like Margin Lending, Securities Lending and Borrowing (SLB), and Covered Short Selling in Nepal. For this, board has published a detailed consultation paper for first time to collect opinions and suggestions from stakeholders.
According to SEBON, this consultation paper is published to evaluate market readiness, discuss necessary policy, legal, structural, and technical setups, and gather feedback from concerned parties.
This initiative follows government’s budget announcement for fiscal year 2083/84, which aims to phase in financial instruments like intraday trading, short selling, and derivatives. SEBON has taken a policy to prepare the required legal, institutional, and procedural structures for these new services.
SEBON mentioned that in developed capital markets, services like margin trading, securities lending and borrowing, and covered short selling make the market more deep, competitive, and efficient. Keeping these practices in mind, SEBON is planning to implement these services in a phased manner to make Nepalese capital market modern, safe, and competitive.
For successful implementation, SEBON said that clear legal base, capable market infrastructure, effective IT systems, strong risk management, and investor protection measures are highly necessary.
What is inside the consultation paper?
The board has divided the consultation paper into four main chapters. The first chapter includes current situation of Nepalese capital market, structural analysis, and need for reforms.
The second part has international experiences, best practices, and key lessons for Nepal. The third part contains Regulatory Impact Analysis, and the fourth chapter includes specific policy recommendations along with suitable models of Margin Lending, Securities Lending and Borrowing (SLB), and Covered Short Selling for Nepal.
The consultation paper also clarifies the roles of SEBON, Nepal Stock Exchange (NEPSE), CDS and Clearing Limited (CDSC), stock brokers, stock dealers, banks and financial institutions, institutional investors, and other related bodies. It also covers legal reforms, regulatory restructuring, market infrastructure strengthening, IT modernization, human resource development, investor education, and phased implementation strategies.
SEBON asking for suggestions
SEBON said that based on constructive feedback received from stakeholders on this consultation paper, they will draft and publish the Margin Lending Regulation, Securities Lending and Borrowing Regulation, and Covered Short Selling Regulation.
Interested individuals and organizations can send their suggestions to the board’s email [email protected].
According to board, once these securities financial services are successfully implemented, it is expected to increase market liquidity, strengthen stability, expand participation of individual and institutional investors, increase use of new financial instruments, and help private sector in long-term capital mobilization.
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.
