Kathmandu, Mar 12:
The process to operate commodity exchange companies in Nepal has been stuck
in the middle even after a year since the process started.
The Securities Board of Nepal (SEBON) could not move ahead with selecting
the companies although capital market regulator had said in June 2019 that it
was giving license to two companies out of the six companies applied.
Meanwhile, the board is mulling to conduct yet another study to decide
about the number of exchanges it should provide with the license as the six
companies have been lobbying to provide license to all.
The board is planning to rethink the decision to license only two
companies which could mean scrapping the entire process and starting
afresh.
If it happened, it would be the second time since the board had already
cancelled the earlier applications of five companies last year.
Erstwhile, chairman of the SEBON Dr. Rewat Bahadur Karki had started the
process and wanted to conclude it before his exit as the chief of the board,
but he couldn’t conclude the process as the committee formed to finalise the
exchange establishment couldn’t submit its recommendation in due time.
The sub-committee led by the Joint Secretary of the Ministry of Finance
Hari Sharan Pudasaini who was one of the directors of the SEBON had finalised
the report, but as he was appointed as the consular general in Guangzhou,
China, the process remained incomplete, said Dr. Karki.
“The SEBON had announced in its Policy and Programmes 2019/20 that it
would provide license to only two exchanges. Since they can appoint many
brokers, two exchanges would be sufficient as per the size of the market in the
country,” he said.
According to the board, the process to establish the commodity exchange
was started with the aim to support the agricultural market with the future
trading facility. About half a dozen companies went bankrupt or cheated the
customers and ultimately shut down in the past while three exchanges are
operating successfully.
Earlier, it had said that the decision to give license to two exchanges
was made to make the market competitive since the only player could create
monopoly.
But in the absence of the proper licensing, their transactions are
illegal as the new Commodities Act 2074 demands the commodity exchange business
must be licensed by the capital market regulator.
Meanwhile, the applicant companies are demanding that the process should
be concluded at the earliest.
The Commodities Act has the provision to issuing license of the
commodities exchanges within four months and commodities trading business,
clearing and settlement business or warehouse within three months.
Nepal Mercantile Exchange, Commodity Future Exchange, Risal Commodity and
Derivative Exchange, Multi Derivate Exchange Nepal, National Commodity Exchange
and Nepal Derivative Exchange had applied to run the commodity exchange.
A commodity exchange company should have paid-up capital of Rs. 500
million.
The commodity exchange will provide a
market place or facility to purchase, sale or exchange commodities in the same
place continuously through commodities contract. They will also enlist
commodities for trading and operate commodities trading.
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