SEBON Studying Viability of New Stock Market

The Securities Board of Nepal (SEBON) -- the capital market regulator -- has started study to gauge the viability of new stock exchange in the country.

"We have already initiated internal study on economic viability of new stock exchanges here. We are also studying the Malaysian experience of operating multiple stock exchanges and new technology applied there,” Neeraj Giri, director of SEBON, told myrepublica.com.

SEBON started studying the viability of new stock markets after three groups filed separate applications to open new stock exchange in the country. However, SEBON officials have asked all applicants to come up with a single proposal keeping in view the small size of economy and capital market in the country.

Seeking permission to open new stock exchange, a business group, comprising Ram Babu Panta and Numa Nath Poudel, has registered an application in the name of National Stock Exchange.

Similarly, another group with Chandra Dhakal, Kamal Gyawali and Gyan Bahadur GC as promoters has applied in the name of Kathmandu Stock Exchange. The third group, with Ace Development Bank as one of the promoters, has also registered the application. All three groups have already made internal preparation to operate new stock market in the country.

“We have already prepared software worth Rs 50 million for share trading and more than two dozen financial institutions are already showing interest to invest in our venture,” said Kamal Gyawali, a promoter of National Stock Exchange. “We are also ready to set up Central Depository System in stock trading.”

SEBON recently formed a committee to expedite the process of granting permission for new ventures. The committee is led by Lal Mani Joshi, board of director, SEBON. A high-level SEBON team, led by Joshi, is leaving for Malaysia on Sunday to study the experience of the East Asian nation which has reduced its stock exchanges to one from three.

“We will learn from Malaysian experience of having more than one stock exchange as well as the modality of running mutual fund and Central Depository System,” said Giri, who is also in the delegation.

Given the increasing number of listed companies in the country´s sole capital market -- Nepal Stock Exchange Ltd (Nepse), experts have claimed that one more stock exchange in the country is viable. About 160 companies are listed in the state-owned Nepse.

However, an official at the SEBON said decision to grant permission to new ventures has to be taken only after conducting in-depth study of capital market taking the declining number of stock exchanges in some countries into consideration.