SEBON to create alternative mutual fund policy to attract foreign investmetn in stork market

Lalitpur, June 9: Securities Board of Nepal (SEBON), the capital market regulator in the country, is working to create Alternative Mutual Fund Bylaws in order to invite foreign investment from Non-Resident Nepalis (NRNs) in the stock market, according to the Securities and Commodities Market Policy and Programme for the Fiscal Year 2018/19 made public by SEBON on Monday.

"The government, in its budget for 2018/19, has announced that new companies working in sectors like private equity, venture capital and hedge fund would be facilitated to enter the capital market. To implement this programme, SEBON will formulate Alternative Mutual Fund policies aiming at mobilising domestic as well as foreign investment in the capital market," said Dr. Rewat Bahadur Karki, chairman of SEBON.

Similarly, in a bid to manage risks in the stock market, SEBON is planning to create a Settlement Guarantee Fund (SGF), which would be used to fulfill the settlement commitment.

The SGF is in practice in India and elsewhere.

It is also planning to develop a risk-based supervision model in order to monitor the securities brokers.

Dr. Karki said that the Board was committed to discourage insider trading to make the securities transaction in the secondary market more trustworthy, and that SEBON would implement a separate Insider Trading Discouragement Bylaws very soon.

The capital market regulator is also planning to restructure the Nepal Stock Exchange Limited (NEPSE) and CDSC and Clearing (CDSC) Limited as per the international practice and Securities Act.

Likewise, to increase transparency and public participation in the merchant banking sector, SEBON is planning to ask the merchant banks to issue 15 per cent shares to the public.

It is also opting to issue mandatory provisions for the NEPSE, CDSC and securities brokerage companies to spend 1 per cent of their income in the areas of capacity enhancement of their staff and Corporate Social Responsibility (CSR).

However, SEBON came soft on its own policy of compulsory provision of Personal Account Number (PAN) for the investors of the secondary market, which was announced in its last year's policy, and said that it had adopted a policy only to promote the PAN.

The capital market regulator said that it was expanding its offices to each of the provinces and would conduct a study on municipal bond, to formulate a policy for the local bodies to issue bonds.       

       

Dr. Karki announced that 'One Nepali, One D-MAT account' programme would be implemented and public participation in the capital market would be increased.

The policy and programmes of the SEBON is dominated by study/research programmes.

A feasibility study will be carried out to know the potential of a separate Equity Index Instrument to promote the Equity Derivatives Market in Nepal.

Another study will be executed to establish an Automated Market Surveillance System at SEBON for the real time surveillance of the transactions in the stock market, listed companies, transaction amount and traded securities.

Likewise, another study will be done to establish a Securities and Futures Dispute Resolution Tribunal (SFDRT) to find a solution to the disputes related to the securities and commodities market.

SEBON Executive Director Niraj Giri said that the efforts to invite the NRN investment to the stock market was delayed as only institutional repatriation of the income made in Nepal was allowed, not individual, and SEBON was making efforts to ease the provision by making amendment in the law.

Published in The Rising Nepal daily on 10 July 2018.