Court Case Against CDSC, But Market Obstacles Persist

In the ongoing legal battle against the CDS and Clearing Limited (CDSC), the affected parties have been forced to seek legal recourse. The Patan High Court has taken the petition filed by Pure Energy seriously, issuing an order for an expedited hearing. The court's involvement in the case reflects the growing concerns surrounding the halt in the dematerialization process and its implications for the capital market.

In the case involving the Golyam Group, although the court did not issue an interim order, it provided legal interpretation suggesting that the existing single ISIN system could proceed as per its current application. This directive appeared to align with the established legal framework. However, despite these legal instructions, the CDSC's ongoing obstruction of share dematerialization has led to further concerns that the issue is being deliberately prolonged. The actions taken so far have done little to resolve the core issue, instead deepening market uncertainty.

Lack of Progress Despite Legal Developments

While the court has given clear directions, the practical reality remains unchanged. The dematerialization process continues to be blocked by the CDSC's insistence on implementing a dual ISIN system, which is not supported by existing laws. This inaction has led to fears that the CDSC is intentionally stalling progress, causing unnecessary delays and uncertainties in the market. Investors and stakeholders are growing increasingly frustrated with the lack of resolution, as the legal proceedings drag on without any tangible changes in the market.

Need for Strengthening the System, Not Disrupting It

The primary need now, according to experts, is to strengthen the existing system rather than halting processes under the guise of transparency. The current legal framework already provides for the protection of investor assets, and the focus should be on reinforcing the system to ensure smoother operations. Delaying the dematerialization of shares not only harms the investors but also creates a situation where the market becomes more volatile, undermining investor confidence.

Legal experts argue that the focus on ISIN as a share identifier rather than as a tool for classifying shareholders is crucial for the smooth functioning of the capital market. Ignoring international practices in this regard only complicates matters further. By failing to follow internationally accepted norms, CDSC risks making Nepal's capital market even more unstable, which could discourage both local and foreign investments.

A Call for Market Stability and Investor Protection

As the legal process continues, the primary concern is to ensure the rights of investors are upheld. The ongoing impasse and the failure to resolve the dematerialization issue are creating a sense of insecurity in the market. The continued stalling of the process threatens to derail Nepal’s capital market growth, as investors are unable to freely trade or use their shares as collateral.

In this situation, experts emphasize the importance of taking swift and decisive actions to resolve the issue. The priority must be to restore investor confidence by adhering to legal frameworks, modernizing the market’s infrastructure, and ensuring that the current regulations are applied effectively. The longer this deadlock persists, the greater the risk of long-term instability in Nepal's financial market, which could ultimately affect the broader economy.

Ultimately, Nepal’s capital market can only thrive if regulatory bodies, such as CDSC, act in accordance with established laws and international best practices, ensuring that the market remains transparent, efficient, and stable for all participants.