Commodity exchange to come into operation next year

Kathmandu, July 9

The Securities Board of Nepal (SEBON) said on Friday that it would operate commodity market next year.

Speaking at a discussion programme on its proposed Policy and Programmes for the coming Fiscal Year 2021/22 organised virtually, SEBON Chairman Bhisma Raj Dhungana has presented the commodity market as one of the major agenda of the capital market regulator.

The policy and programmes would have the objectives of enhancing the regulatory capacity of the board, developing legal structure for the effective regulation, supervision and management of the securities and commodities markets, enhancing the capacity of the market participants and managing the market risks.

Dhungana said that the plans were underway to reform the Nepal Stock Exchange and CDS and Clearing Limited.

The SEBON is also mulling to implement automated transaction system for the secondary market of debentures and facilitate the Trade Management Syatem (TMS) broker back office infrastructure.

Presenting the major proposals of the upcoming policy and programmes, Deputy Executive Director of the Board, Dr. Nabaraj Adhikari, said that directives for the institutional governance of the securities market operators and market participants would be formulated and implemented in the coming fiscal.

Similarly, a central statistics bank for capital market, Electronic Reporting and Retrieval System (ERRS) and feasibility study for the establishment of the regional offices of the board would also be the top agenda of the next year's policy.

Speaking at the programme, Dr. Rewat Bahadur Karki, formar Chairman of the board, said that Stock market regulator should be more vigilant and strong to create safe environment for investment in the stock market.

He recommended to operate a second stock exchange in order to create competition in the market.

Former Chairman Deepak Raj Kafle suggested to create provision for merger and acquisitions of the companies working in capital market sector.

Nepali capital market has 541 participants including one securities market operator, one central depositary company, 15 mutual funds, 50 share brokers and 30 merchant bankers.

Participation of common investors has witnessed a tidal changes in the past one year as the number of Demat account jumped to 3.5 million by mid-June 2021 from 1.7 million in mid-July 2020.

Similarly, the number of Mero Share accounts has reached 2.6 million in a year from mere 700,000. More than 2 million investors apply for an Initial Public Offering (IPO) – more than four times higher than a year earlier. With the facility of online share/IPO application, common people even from the remote areas are attracted to the share market.

Approximately 220 companies are listed in the Nepal Stock Exchange (NEPSE) by the end of the current fiscal year 2020/21. Share market capitalization has reached Rs. 4216 billion which is higher than the Gross Domestic Product (GDP) of the country.

In the current fiscal, SEBON has licensed the Citizen Stock Dealer Limited, a subsidiary of Citizen Investment Trust, to work as a stock dealer.

Published in The Rising Nepal daily on 10 July 2021.