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NEPSE Board Delay Postpones SEBON’s Margin Trading Launch, Investors Left Waiting
Author
NEPSETRADING
Kathmandu – The Securities Board of Nepal (SEBON) had issued the “Margin Trading Facility Directive, 2082” with much fanfare, aiming to enhance liquidity in the stock market and allow investors to buy shares using loans through brokers. Although the directive came into effect on Falgun 1, investors are still unable to access this facility as of Chaitra 10, mainly due to the slow and indecisive approach of the Nepal Stock Exchange (NEPSE) management committee.The directive, issued under Section 118 of the Securities Act, 2063, allows brokers with a paid-up capital of NPR 20 crore and proper membership to offer margin trading. While many brokers have completed the necessary technical and capital preparations, NEPSE has delayed the process by citing Section 14 of the directive, which requires an internal operating procedure to be established. Despite drafts being ready, the NEPSE board has yet to approve them, reportedly due to disagreements and conflicting interests among its directors.Once implemented, investors would have been able to trade with a 30% initial margin and access up to 70% of funds from brokers, potentially creating demand worth billions in the market. The delay not only prevents brokers from starting margin trading but also denies investors the opportunity to benefit from the market’s upward trend. Most brokers have already prepared separate “margin trading accounts” and “margin trading beneficiary accounts,” and are aware of procedures such as margin calls and investing up to five times their net worth. Yet, without NEPSE’s approval of the operating procedure, no orders can be entered in the TMS system.The NEPSE board’s inertia is now challenging the authority of SEBON. The prolonged delay after the Falgun 1 deadline has raised concerns about the effectiveness of market reforms, sending negative signals to investors. If NEPSE does not urgently approve and implement the procedure, the responsibility for any market setbacks will fall squarely on its leadership.
