Kathmandu. The Securities Board of Nepal (SEBON) has published a consultation paper on the implementation of margin lending, securities lending and short selling. This is the first time that SEBON has published a consultation paper on the concept paper on policy, legal, structural and technical arrangements for these devices in the stock market. <\/p>\n
For the current fiscal year 2083. In the budget statement of ’84, the government announced that it will introduce instruments such as intraday, short selling and derivatives in a phased manner. Similarly, SEBON’s capital market policy and program for the current fiscal year has announced a program to provide legal, institutional and procedural structures for the operation of margin lending, securities lending and borrowing and short selling. <\/p>\n
“The evolution of global capital markets has shown that new services such as margin lending, securities lending and covered short selling have laid an important foundation for deepening, competitive and efficient markets,” Sebon said. SEBON has a policy of making Nepal’s capital market modern, competitive, safe and in line with international practices to make margin transactions effective, securities lending and covered short selling in a phased manner. “Clear legal basis, sound market infrastructure, effective information technology system, strong risk management and investor protection measures are essential for the successful implementation of such securities services,” reads the concept paper. <\/p>\n
Sebon has prepared a concept paper divided into four different chapters. The first chapter deals with the current situation of Nepal’s capital market, the need for structural analysis and reform, the second chapter deals with international experience, good practices and key learnings for Nepal, the third chapter deals with regulatory impact analysis and the fourth chapter deals with specific policy recommendations for Nepal, including the appropriate margin lending model, securities lending and borrowing model and covered short selling model. <\/p>\n
The concept paper clearly specifies the preparation and role of the institutional and institutional works. The committee has made clear the role of SEBON, NEPSE, CDSC, share brokers, stock dealers, banks and financial institutions, institutional investors and other related bodies. The concept paper covers legal reforms, regulatory restructuring, strengthening of market infrastructure, information technology modernization, human resource development, investor education and phased implementation strategy. <\/p>\n
SEBON has requested the public to provide suggestions in an e-mail research@sebon.gov.np as soon as the concept paper will be formulated and made public after studying the constructive suggestions received from all stakeholders for public consultation. <\/p>\n
The successful implementation of the securities financial services will stabilize Nepal’s capital markets, increase liquidity, expand participation of investors (individual and institutional), provide new financial instruments to investors and contribute to the long-term capital mobilization of the private sector. <\/p>\n