SEJON holds ‘Policy Discussion on Capital Market Development’

KATHMANDU: Society of Economic Journalists-Nepal (SEJON) on Monday organised a programme to hold discussions on capital market development. In the programme titled 'Policy Discussion on Capital Market Development' held in the Capital, Securities Board of Nepal (SEBON) Chairman Ramesh Kumar Hamal said SEBON, the apex regulator of securities markets, and Nepal Stock Exchange (NEPSE) should be autonomous for the proper development of the capital market. He informed that discussions with the Ministry of Finance regarding this were ongoing. He argued that market development is not possible until regulatory bodies like SEBON and NEPSE act like departments of the Finance Ministry. He underscored the need for competition for the development of share market. SEBON Chairman Hamal argued that it is a misunderstanding to term capital market as 'gamble'. He opined that there should be no monopoly but fair competition in the market. He also informed that a study is being conducted to reduce the fees charged by NEPSE and SEBON. A capable broker should be allowed to open branches with respect to his capability rather than SEBON just giving permission to brokers to open branches," Hamal opined. On the occasion, the SEBON Chairman informed that two companies have already been licensed for venture capital and seven other companies will be licensed within a week. "With the increase in the number of investors in the share market, it is now necessary to go completely digital," SEBON Chairman Hamal said and added that technology should be developed for margin trading. Executive Director of Nepal Rastra Bank, Prakash Kumar Shrestha, said the central bank was ready to execute the task necessary for the implementation of margin trading. Likewise, SEBON Executive Director Binaya Dev Acharya said financial literacy was also important for the expansion of share market. He said the board has been amending the directive related to brokers. Taking part in the discussion, NEPSE Manager Niranjan Phuyal opined that just the procedure for Magin trading is not enough, it requires regulations while SEBON Executive Director Mukti Shrestha suggested the facility of two Demat accounts for the trading. Former President of Stock Brokers' Association of Nepal (SBAN), Priyaraj Regmi said if the system of NEPSE allowed the opening of two Demat accounts it would help differentiate shares bought from margin trading from other shares. Likewise, SBAN President Santosh Mainali pointed out difficulties in extending broker branches due to the existing law. He alleged that SEBON was not giving permission to open brokers' branches on time, and added that the law was not friendly with establishing brokers' offices outside Kathmandu valley. He opined that if brokers are made branchless, every household would gain the access to the share market. Former Executive Director of the central bank, Gopal Bhatta presented a working paper on 'Margin lending concept, practice and model'. He said it is necessary to start margin trading in order to bring stability to the market and to flow the investment amount in the market. Bhatta said the law in the country is not clear where should the loan received against the securities of share be invested. Former Executive Director of NRB said NRB, SEBON, NEPSE, brokers and bankers should come together to start margin trading. Share market expert Manoj Shahi presented a working paper on 'Geographical expansion of capital market'. He emphasized the importance of proper technology for the expansion of the market and to solve the problems faced by the market. He said the development of technology is necessary as many investors have started mobile trading. READ ALSO: