KATHMANDU: The government has accelerated the establishment of Nepal's second stock market by granting the Securities Board of Nepal (SEBON) a license after the Ministry of Finance (MoF) approved the move. This action has greatly improved the diversification of Nepal's financial market infrastructure.
A SEBON representative attested to obtaining official approval from its overseeing ministry. The MoF instructed SEBON to take the required actions to move the process along, which has previously encountered many obstacles and delays, after a Cabinet decision.
Amidst lingering disputes, the Cabinet formally directed SEBON to move forward with licensing the new stock exchange last month. SEBON will shortly discuss the new platform's modality, either by evaluating previous applications or by releasing a new request for proposals, according to sources.
SEBON had initially called for applications in September 2022, but the process was interrupted by a Supreme Court order. Following the court’s dismissal of the case, SEBON reopened the application process in April 2023. Three firms—Himalaya Stock Exchange, National Stock Exchange, and Annapurna Stock Exchange—submitted applications, seeking approval to operate.
Notable investors in the Himalaya Stock Exchange include directors from Himalayan Reinsurance Company and former FNCCI presidents Pashupati Murarka, Bhawani Rana, and Shekhar Golchha. Their involvement shows that well-known corporate leaders are very interested.
Prominent backers also support the National Stock Exchange, which is backed by the Siddharth Group and Agni Group. These include Dr. Badri KC, the current president of the Non-Resident Nepali Association, and previous presidents Jiba Lamichhane and Upendra Mahato. Another significant investor in the business is Kul Acharya.
The owner of Annapurna Media House, Captain Rameswor Thapa, is in charge of the Annapurna Stock Exchange. Among the important stakeholders are well-known individuals like Prakash Kumar Shrestha, Anil Sapkota, and Surendraraj Wagle.
After it was claimed that the government gave favor to applicants with connections to ruling parties, the licensing procedure came under fire. This idea of political interference led several sources to condemn the proposal.
Reports state that then-prime minister Pushpa Kamal Dahal put a stop to the process in April 2023 because he couldn't make it work for personal reasons. The project's progress was significantly slowed down by this action.
Disagreements between Dahal and his coalition partner, KP Sharma Oli, resulted in the lack of a SEBON chairperson for around 11 months, which further prolonged the delays. At a crucial point in the growth of the stock market, these disagreements left the regulator without a leader.
The impasse was resolved when the new government led by Oli appointed Santosh Narayan Shrestha as SEBON’s chairperson. This appointment allowed SEBON to resume its functions and advance the licensing process.
The government's plan to create the new stock exchange was approved by the Parliamentary Finance Committee on November 9, 2024, which sparked new efforts to proceed with the project. In order to overcome earlier challenges, this approval was a crucial step.
The current Nepal Stock Exchange (NEPSE), which has been the only participant in Nepal's secondary market since its founding on January 13, 1994, would be supplemented by the planned stock exchange. In order to regulate and facilitate market activities, NEPSE has been essential.
The new stock exchange aims to improve efficiency and investor services by making the financial sector more competitive. The financial climate in Nepal is expected to have more chances as a result of this development.
Notwithstanding the project's potential benefits, it is contentious due to its political overtones and the involvement of influential individuals. A lot of people are watching to see how SEBON will oversee the license process and ensure openness.
The initiative could finally move forward if the government takes decisive action. It promises to change Nepal's financial environment and threaten the long-standing monopoly in the secondary market segment.
