KATHMANDU, June 7: Finance Minister Yuba Raj Khatiwada on Sunday expressed his dissatisfaction over the differences between the Securities Board of Nepal (Sebon) and Nepal Stock Exchange (Nepse) that become public from time to time.
In the past, the disagreement between the two main players of the country’s only stock exchange market surfaced - mainly in the cases related to operating remote workstation, providing banks with brokerage licenses, operating clearing banks or awarding contracts to develop Nepse Online Trading System, among others. In a recent case of disagreement that surfaced last March, Nepse even refused to follow the Sebon’s direction to shut down the secondary market in a bid to stem the possible spread of coronavirus in the country.
Such issues between the two authorities are found to have adversely affected the growth of the stock exchange market in the country. In many cases, the ‘open warpath’ adopted by them has affected the investors’ confidence, taking down heavily the transaction in both primary and secondary markets.
Speaking at a program organized to mark the 28th anniversary of Sebon, Minister Khatiwada said it is not appropriate that such disagreements between the regulator and its subordinate agencies go public. “The regulator should play an effective role to settle down any such issues and maintain good coordination among the agencies concerned,” he added.
Govt forms committee to study the necessity of second stock exc...
The finance minister also stressed the need for necessary preparation that both Sebon and Nepse need to make even during the lockdown period. “They have to think about taking the market to full-fledged operation of an online trading system, endorsing necessary policies to increase liquidity in the capital market and reducing the transaction settlement cycle from the existing T+3 days,” said Khatiwada.
The lack of a full-fledged online trading system and a diversified financial instrument in the stock exchange market, among others, have been blamed for taking the country’s secondary market to a standstill for more than two months along with the start of the lockdown period. The government authorities have also no answer for a definite timeline to resume the operation of the secondary market. This has largely affected capital mobilization in the country.
Khatiwada also sought the need for introducing diversified market instruments such as hedge funds, venture capital, blended finance and commodity exchange for a fast-pace growth of the secondary market which has been moving at a snail’s pace even though it was established more than two decades ago.
Dhruva Timilsina, president of Nepal Merchant Bankers Association, said the management of private equity and deposit and investment funds could energize the market growth. According to him, currently the size of mutual funds stands at just Rs 17 billion.
Bharat Ranabhat, president of Stock Brokers’ Association of Nepal, expressed his dissatisfaction over the “slow work” by Sebon. “The reform in policies and their effective implementation are the key factors to build up the investors’ confidence even when the market will reopen after the government lifts the lockdown,” Ranabhat said.
Sebon Chairman Bhisma Raj Dhungana said they are holding talks with the stakeholders to fix the right time to resume the market operation.
During mid July-mid May of this fiscal year, capital worth Rs 30.89 billion was mobilized in the country’s capital market via 30 issuances of primary instruments including initial public offerings, follow-on public offers, debentures and mutual fund schemes, according to Sebon. During the period, stocks of Rs 131 billion were transacted in the secondary market while the sector paid a capital gains tax of Rs 888.30 million to the government.
