After almost a year, the Securities Board formally discussed the license of the new stock exchange in the Board of Directors.
Discussions have been held in the Nepal Securities Board regarding the license of the new stock exchange with private sector investment, which has been postponed for a long time due to disputes. In the meeting of the board of directors of Nepal Securities Board held last Tuesday, the issue of the new stock exchange was formally discussed for the first time after the new chairman Santosh Narayan Shrestha assumed the leadership.
The Ministry of Finance sent a letter to the Securities Board last week to proceed with the process regarding the license distribution of the new stock exchange. Based on the same letter, the Securities Board discussed the new stock exchange. Spokesperson of Nepal Securities Board Niranjay Ghimire said that the matter is under discussion and no decision has been made about it.
The Council of Ministers meeting on December 5 has decided to send the report of the previously formed study committee to the Ministry of Finance regarding the granting of license for securities market operations. Based on the same decision, the Ministry of Finance had sent a letter to the Nepal Securities Board last week. The decision of the Council of Ministers and the letter of the Ministry of Finance have been analyzed from different angles.
One group has said that they are going to distribute the license of the new stock exchange by sending the report to the Ministry of Finance, while the other group has interpreted it as trying to set aside the committee formed by the decision of the Council of Ministers without implementing it themselves. However, with the appointment of a new chairman in the Securities Board, it is seen as meaningful that the issue of the new exchange's license and the Securities Board's discussion in the board of directors after receiving the letter.
According to the law, the government cannot issue licenses for new stock exchanges. License distribution is done by Nepal Securities Board. However, the government can give instructions. Earlier, since the government had stopped the process, the Securities Board did not proceed further with the new license of the exchange, saying that Fukua should also be released. Now, citing the decision of the Council of Ministers, after coming from the Ministry of Finance, the Securities Board has formally started the discussion regarding the stock exchange license.
The then Prime Minister Pushpa Kamal Dahal gave instructions to stop the process in Baisakh 2080 after there was a strong protest on both the streets and the parliament saying that the license of stock exchange was manipulated to certain business houses. Parliamentarians also protested against the distribution of licenses to private investment stock exchanges claiming that there was financial manipulation.
The Securities Board was being accused of proceeding with the licensing process 'in a middleman's setting'. This issue was also raised in the House of Representatives. The Prime Minister had instructed to stop the process saying that it is not appropriate to distribute new licenses to the private sector despite the presence of the Government Stock Exchange (NEPSE). Ramesh Hamal, the former chairman of the Securities Board, had started the license distribution process by making policy arrangements for the distribution of licenses of private stock exchanges. However, the process for distribution of new licenses started when Sher Bahadur Deuba was the Prime Minister and Janardan Sharma was the Finance Minister. Claiming that there is institutional corruption in the license distribution process, the parliamentarians have been demanding to stop it.
Political parties, including the National Independent Party, have stated that they will oppose the government's process of licensing. "Deputy leader of RSVP parliamentary party Virajbhakta Shrestha said that there was a serious discussion in the meeting of the parliamentary party about the distribution of licenses for the new stock exchange," he said. It is against the process. The government and regulatory bodies have disregarded the law.' He informed that even then they had written a note of dissent. It is going to be added by showing political bully by mixing the rule of law and system. Investments of 40-60 lakh investors are being lost. NEPSE itself needs to be improved and made more technologically advanced,' he added, 'the current Prime Minister's economic and development advisor suggested that you stop it if you can.' Contrary to practice, the 'Securities Market Operation Regulations, 2064' was amended, in which private limited companies can also invest in the stock exchange. Previously, only banks, financial institutions, securities dealers and listed organizations could invest in the securities market. Private limited companies could not invest in the stock exchange. According to the previous provision, no single company or organization can hold more than 10 percent of the total share capital of the securities market.
The board's decision to raise the investment limit to 15 percent in the stock exchange is contrary to international practice, experts say. Revat Bahadur Karki, the former chairman of Nepal Securities Board, says that since another exchange is needed to make the current NEPSE stronger and more competitive, the policy arrangement made for the new one is not right. "Now private limited companies can also invest in exchange companies, which is not right," he said There is a provision that a company can invest only up to 7 percent in the country's stock exchange. Most of the business houses have investments in banks and financial institutions and insurance companies. When the same person is a banker and a businessman, there is a conflict of interest.
Currently, the only government-owned Nepal Stock Exchange is operating in Nepal. At the end of November 2081, the number of companies listed in the Nepal Stock Exchange is 267. Among the listed companies, there are 129 banks and financial institutions and insurance companies, while 91 belong to hydropower companies, 22 manufacturing and processing industries, 7 hotels, 7 investment companies, 4 trading organizations and 7 other groups.
