Nepal's Stock Market: Need for Reform and Challenges of New Leadership

With the appointment of Santosh Narayan Shrestha as the new Chairman of the Securities Board of Nepal (SEBON), the future of Nepal's stock market is being viewed with renewed optimism. The stock market holds the potential to become a cornerstone of Nepal's economic growth, yet it has not achieved the anticipated development. In this context, the new leadership bears a significant responsibility to devise and implement a clear roadmap for market reform and advancement.

To boost investor confidence and make the stock market transparent, modern, and accessible to all, the board must put forward robust strategies. For primary market reforms, removing unnecessary restrictions on mutual funds in primary shares, institutionalizing the 10-unit allotment policy, and making the book-building process more transparent should be top priorities.

Similarly, secondary market reforms must include the prompt implementation of intraday trading, real-time transaction information availability in investors' accounts, and the introduction of fractional share trading to attract small investors. Organizing the broker system by transforming brokerage companies into public entities and introducing margin trading through brokers should be implemented without delay.

In terms of modernizing information systems and the Central Depository System (CDS), the board should ensure all stock market-related data is available within a unified system, simplify mutual fund and dividend distribution processes, and make essential services accessible digitally for investors.

To make the securities market genuinely beneficial for all, the board should introduce new financial instruments, such as ETFs, bond funds, and short-selling mechanisms. Expanding the stock trading system to rural areas to enhance access for both small and large investors across the country is also imperative.

If the new chairman successfully executes these reforms, investor trust can be restored, and the stock market could become a vital pillar of Nepal's economic growth. These improvement plans will not only strengthen the market but also enhance the overall economic framework of the country. However, achieving these goals requires clear vision, determination, and transparency in leadership.

Making this new beginning a historically significant chapter in Nepal's stock market reform will require collective efforts from leadership and stakeholders alike.