This news reports that Dr. Gopalprasad Bhatt, Chairman of the Nepal Securities Board (SEBON), announced the upcoming implementation of a ‘short selling’ system in the capital market, allowing investors to profit even when the market declines.
Dr. Gopalprasad Bhatt, the Chairman of the Nepal Securities Board (SEBON), revealed that the ‘short selling’ system is going to be implemented in Nepal’s capital market very soon.
Speaking at a Finance Committee meeting on Wednesday, Chairman Bhatt explained that this system aims to allow investors to earn returns not just when the market rises, but also when it falls. He pointed out that in Nepal, there is a common belief that share market should always keep rising. However, he clarified that no country’s capital market can continuously go upwards. He also complained that SEBON faces unnecessary pressure when the market goes down. Bhatt emphasized that SEBON’s role is to provide a fair playing field available for all, not to dictate the market’s direction.
According to Chairman Bhatt, once the short selling system is implemented, the current problem of investors protesting when the market falls will come to an end. Under this system, investors who predict a market decline can borrow shares and sell them. Later, when the price drops, they can buy back those same shares at a lower price to return them, thus profiting from the price difference. Investors who expect the market to rise can continue to buy shares and sell them for profit when their value increases, just as they do now. Chairman Bhatt claimed that this arrangement will transform the one-sided psychology that the market must always go up, fostering an environment where investors make decisions based on their own study and analysis. He reiterated that the Securities Board’s responsibility is only to ensure rules, regulation, and equal opportunities in the market, with investment decisions fully depending on the investor’s own judgment.
He stated, “Our market’s nature right now is that everyone gets worried if the market falls and happy if it rises. There is a belief that the market must always keep rising. Everyone says, ‘The market must go up, it must go up.’ But then, if it goes up too much, questions also arise like, ‘What is the Securities Board doing, why is it rising unnecessarily like this?’ In Nepal’s context, the market has to keep rising. No one will be happy even if it reaches 3,000, or 3,500, or 5,000. There is no limit to this. But the market cannot always keep rising. No index in the world continues to rise forever. However, in Nepal, if the market reaches 5,000 and then falls, the Securities Board will be surrounded, which happened yesterday. I faced it yesterday; it was the first time in my life I faced a siege. The reason why Nepal’s market ‘must keep rising’ is one: investors buy shares. They buy shares at a certain price, and for us to get a return, the share price needs to go up. Without the share price rising, we will not get our return. Everyone invests for return; that is the rule of investment, for profit, and it must rise. Now, we are creating a mechanism for investors to get returns no matter where the market goes. This means you get returns even if the market goes down, and you get returns even if the market goes up. We are soon introducing an instrument called ‘short selling’ that will be implementable. In this, if an investor expects the market to fall, he will use this instrument. He borrows shares in the market right now and sells them off; he borrows them from others as a loan, and sells them. His expectation is that the market will fall in the future, and he will buy these shares back when they are lower and return them. Now, he benefits. If he sells a share worth Rs. 50 now, he can say he will buy it back and return it when it’s Rs. 30. He makes a profit of Rs. 20. If someone expects the market to rise, they buy a share at Rs. 50 now and sell it when it’s Rs. 80 to make a profit. Both types of investors will now be divided. After that, these ‘investor associations’ will also not exist. The reason for the market being forced to rise until now is that everyone has been on the same side. Because of this, capital market investor associations are formed and they surround us. We will put an end to this problem currently seen in the market.”
Chairman Bhatt also shared that necessary policy arrangements are being introduced to control rumors spreading in the market. He mentioned receiving complaints that investor morale has dropped because of government actions, including asset investigations. He further informed that SEBON will coordinate with relevant government bodies on matters related to asset investigations, inspections, and controlling financial crimes. He also stated that for the improvement of Nepal’s capital market, the Board recently published “Nepal’s Capital Market Development Roadmap, 2083“. Furthermore, he added that the capital market policy for the fiscal year 2083/084 was also made public for the Board’s activities in the upcoming fiscal year.
–News Agency Nepal
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.
