The Nepal Securities Board (SEBON) has announced plans to implement a T+1 settlement system and introduce intra-day trading as part of its capital market policy for the fiscal year 2083/84.
The Nepal Securities Board (SEBON) unveiled its capital market policy for the fiscal year 2083/84, declaring its intention to introduce a T+1 settlement system and begin intra-day trading. These initiatives aim to enhance market liquidity and overall efficiency in the Nepali stock market.
SEBON stated it will gradually transition the current settlement cycle towards the T+1 system. This means transactions would settle one trading day after they occur. Furthermore, the board plans to move forward with necessary legal and institutional preparations for implementing the Central Counterparty (CCP) concept. This is crucial for minimizing counterparty risk, which is the possibility that one party involved in a transaction might fail to fulfill their obligations.
The policy also includes a plan for operating an auction market. This market will manage securities that cannot be settled through regular processes.
To make the market more vibrant, SEBON will launch intra-day trading on a trial basis. Once this system is in place, investors will able to buy and sell shares within the same trading day. Additionally, the board has plans to implement a Short Selling system and Securities Lending and Borrowing (SLB) gradually. Short selling allows investors to sell borrowed shares, hoping to buy them back later at a lower price for profit.
To control extreme price fluctuations and maintain stability, the policy also includes a goal to develop a Market Maker system and an Authorized Participant system. Market makers help provide constant liquidity by always being ready to buy or sell securities.
Moreover, the entire process from trading to settlement will become automated through the implementation of a Straight Through Processing (STP) system. SEBON intends to fully digitize payments and securities transfers by strengthening coordination among the Nepal Stock Exchange (NEPSE), CDS and Clearing (CDSC), and the banking system.
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.
