SEBON to implement e-auction in book building process

Lalitpur, July 3

The Securities Board of Nepal (SEBON) has indicated that it is going to announce the policy to implement Automated Electronic Auction System in book building process to determine the price at which an Initial Public Offering (IPO) would be sold.

The electronic auction will bring the buyers and sellers together to determine the transaction price.

 "We need to adopt the latest technological advancement for the development of the capital market in Nepal. SEBON's policy and programmes for the next fiscal year 2022/23 will give priority to this," chairperson of the SEBON, Ramesh Kumar Hamal, said at a programme organised to solicit policy suggestions from the major stakeholders of the capital market in the country.

According to him, programme to promote the issuance of the shares of the government owned companies like the Nepal Electricity Authority (NEA) and Kathmandu Upatyaka Khanepani Limited (KUKL) and commercially successful companies, would be announced through the policy and programmes.

The government has announced in the budget of the FY 2022/23 that provision would be made to list the companies that have Rs. 1 billon or higher paid-up capital, made annual transaction of more than Rs. 5 billion, that use natural resources, and public limited companies that obtain subsidy, discounts and tax waive from the government in the stock exchange.

Hamal also said that the work to create a SMEs platform at the Nepal Stock Exchange Limited (NEPSE) has begun and it would come into operation within a few months next year.

"We need to enhance the capacity, professionalism and standards of the participants of the capital market. So, plans would be designed to enhance their standards," he informed.

Former Chairman of the Board Dr. Rewat Bahadur Karki, suggested establishing a second stock exchange with the participation of the private sector.

Representatives of the various sectors of the capital market suggested making the SEBON more autonomous, and enhancing its monitoring capacity. They also said that there should be a maturity on the part of the investors as well so the SEBON and other stakeholders invest in investors’ literacy and capacity building programmes.

Dr. Karki suggested increasing the number of stock brokers, issuing broker license to the banks and financial institutions, providing dealership rights to them.

"In order to make the capital market regulator more autonomous, it should not be asking suggestions from the Ministry of Finance on technical matters," he said.

Former executive director of the Nepal Rastra Bank Nara Bahadur Thapa said that the capital market in Nepal has made a negligible progress in about three decades since establishment, and neither it has been connected with the national economy nor integrated with the global capital market.

Niraj Giri, who was recently retired as the Executive Director of the Board, said that the supervision capacity of the SEBON is weak and it needs new instrument to support it.

President of Stock Brokers' Association of Nepal Santosh Mainali said that there was no support to them in the expansion of branch offices. "Our company had finished the creation of branch offices last year but SEBON has not yet visited it and provided approval," he said.

He suggested not to reduce the brokers' commission instead create a provision to invest 10 per cent of the commission in infrastructure development.

Likewise, Chief Executive Officer of NEPSE, Krishna Bahadur Karki, said that a code of conduct is needed to control the fake news and information in social media. 

 Published in The Rising Nepal daily on 4 July 2022.