The Securities Board of Nepal (SEBON) has approved the “Margin Trading Facility Directive, 2082” under Section 118 of the Securities Act, 2063. The directive comes into effect from Falgun 1, allowing investors to engage in margin trading through licensed broker companies.
Under the directive, only shares of listed companies meeting specific eligibility criteria can be used for margin trading. These criteria include having at least 2.5 million publicly listed shares, a net worth equal to or exceeding paid-up capital, profitability in at least two of the last three fiscal years, and completion of two years since IPO listing.
Broker companies offering margin facilities must meet regulatory requirements, including a minimum paid-up capital of NPR 200 million, membership with RAFSAF, and deposit membership. Brokers must also obtain approval from the securities market before providing services to investors.
The directive sets a minimum initial margin of 30% and a maintenance margin of at least 20%. If the share price falls and the required margin is not maintained, brokers may issue a “margin call” to investors, and if the shortfall is not met, brokers can sell the relevant shares.
Brokers can provide margin facilities using their own funds, loans from banks or financial institutions, or unsecured loans from shareholders. However, such loans cannot exceed 4.5 times the broker’s net worth, and no single client may receive more than 10% of the total margin facility.
Investors must open separate margin and Demat accounts for margin trading. Brokers are required to submit daily reports to the securities market and clearly explain risk assessment, written agreements, service fees, interest, and the margin call process to clients.
This article was originally published on https://bajarkochirfar.com. Translated with the help of AI and reviewed by our editorial team.
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