Kathmandu. The Securities Board of Nepal (SEBON) has published a consultation paper on policy, legal, structural and technical preparations required for the operation of margin lending, securities lending and borrowing and covered short selling in the capital market of Nepal.

KATHMANDU: The Board of Secondary Education Board (NTB) has published a consultation paper on policy, legal, structural and technical arrangement for margin lending, securities lending, credit and short selling in the securities market of Nepal.

In the budget for the current fiscal year 2083/84, the government has announced to introduce modern financial instruments such as intraday transactions, short selling and derivatives in a phased manner. Accordingly, the board will prepare the necessary legal, institutional and procedural structures for the operation of margin lending, securities lending, credit and short selling in the capital market policy and program for the current fiscal year.

According to the Board, the experience of the developed capital markets in the world has shown that services such as margin lending, securities lending, credit and short-selling with cover have played an important role in making the market deeper, competitive, transparent and effective.

The board has stated that a clear legal base, efficient market infrastructures, modern information technology system, effective risk management and adequate provisions for investor protection are essential for the effective implementation of such services.

The first chapter of the concept paper, divided into 4 chapters, deals with the current situation of Nepal’s capital market, structural analysis and the need for reform.

The second chapter presents international experiences, good practices and useful learnings for Nepal, while the third chapter discusses the regulatory impact analysis. The fourth chapter proposes appropriate models and policy recommendations for the operation of margin lending, securities lending and borrowing, and covered short selling in Nepal.

The concept paper clearly mentions the roles and responsibilities of Securities Board of Nepal, Nepal Stock Exchange (NEPSE), CDS and Clearing Limited (CDSC), securities brokers, securities traders, banks and financial institutions, institutional investors and other related bodies.

Likewise, legal reforms, regulatory restructuring, strengthening of market infrastructure, modernization of information technology, human resource development, investor education and phased implementation strategy have also been included in the meeting.

After studying and analyzing the suggestions received on the concept paper published by the Board, the Margin Lending Regulations, Securities Lending and Lending Regulations and Short-Selling Regulations with cover will be formulated and made public.