SEBON launches dual reform drive for capital market

The Securities Board of Nepal (SEBON) has formed two separate bodies to accelerate reforms in the country's primary and secondary capital markets, aiming to improve transparency, strengthen regulation, and introduce new trading mechanisms.

A seven-member Primary Market Reform Facilitating Task Force, led by SEBON Regulation Department Executive Director Binay Dev Acharya, has been established to recommend policy and regulatory reforms that will make the primary market more transparent, credible, and investor-friendly.

The task force comprises three SEBON officials, one representative each from the Nepal Stock Exchange (NEPSE) and the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), and the President of the Merchant Bankers Association of Nepal.

The mandate is to review key aspects of the primary market, including public offerings, book building, merchant banking, IPO allocation, digital IPOs, eligibility criteria, pricing, institutional and anchor investors, due diligence, and post-issue monitoring.

SEBON said the task force may also seek input from experts representing the Institute of Chartered Accountants of Nepal (ICAN), the Electricity Regulatory Commission (ERC), the Independent Power Producers' Association of Nepal (IPPAN), the Stock Brokers Association of Nepal, CDS and Clearing Ltd., and other stakeholders.

The panel has already held its inaugural meeting, where discussions focused on reforms to the IPO allocation system, strengthening listing eligibility standards based on profitability, net worth, corporate governance, operating history, and financial performance, and enhancing due diligence requirements before companies go public.

Separately, SEBON has constituted a committee to coordinate the implementation of its secondary market reform agenda. The committee, chaired by Supervision Department Executive Director Rupesh KC, includes representatives from SEBON, NEPSE, CDS and Clearing Ltd., and the Stock Brokers Association of Nepal.

The committee will recommend the legal, operational, technical, and procedural framework required to introduce margin lending, intraday trading, securities lending and borrowing, and covered short selling in Nepal's stock market.

SEBON plans to roll out the reforms in phases during the current fiscal year, beginning with margin lending, followed by intraday trading, securities lending and borrowing, and finally cover short selling. The committee has already started discussions on a draft regulation for margin lending.