The controversy gathered momentum after Ministry of Finance Joint Secretary Mahesh Acharya informed the Parliamentary Finance Committee that the 10-unit system encourages short-term trading, leading to an oversupply of shares immediately after listing and destabilizing the secondary market. The statement has sharply divided policymakers, market experts, former regulators, and retail investors.

Prior to the policy’s implementation in 2074 BS, IPO allotments operated under a pro-rata system that heavily favored wealthy applicants. Former Securities Board of Nepal (SEBON) Chairman Dr. Rewat Bahadur Karki noted that under the old framework, large-scale applicants secured bulk allotments while small retail investors were often left empty-handed. Furthermore, mandatory minimum application thresholds of NPR 5,000 (50 units) excluded students, housewives, and low-income earners.

The introduction of the 10-unit policy alongside the C-ASBA system drastically democratized market access, driving total Demat accounts from 1.5 million to over 8 million. Advocates emphasize that the policy allowed everyday citizens, including migrant workers and students, to own stakes in major hydropower projects and commercial banks for an initial investment as low as NPR 1,000.

Critics of the policy, including Ministry officials, contend that small allotment sizes prevent investors from holding shares long-term, sparking immediate selling pressure upon listing.

However, capital market analyst Rabindra Bhattarai countered that criticizing retail investors' trading behavior ignores broader socio-economic realities. He argued that lower-income participants naturally realize short-term gains to meet immediate financial needs, suggesting that regulators should offer tax incentives or attractive holding instruments rather than restricting market entry.

Similarly, Tara Prasad Phulel, President of the Investors Association, argued that blaming retail allotments misidentifies the root causes of market volatility. Phulel attributed market vulnerabilities to structural flaws, including:

• Low Floating Supply: Promoters typically hold up to 90% of total shares, leaving only 10% for public issue and enabling price manipulation.

• Lack of Advanced Trading Instruments: Absence of intraday trading and short-selling mechanisms.

• Weak Regulatory Oversight: Ineffective monitoring of market cornering.

To reform the system without harming small investors, Phulel recommended raising public IPO quotas to a minimum of 40%, reserving dedicated quotas for mutual funds to boost financial literacy, and potentially lowering application minimums to 4–5 units.

Similarly, former SEBON Executive Director Niraj Giri pointed out that issuing junk or underperforming stocks at a uniform face value of NPR 100 inflates speculative risk. He emphasized that expanding the book-building system—where share prices are determined based on underlying financial strength rather than a fixed base price—would naturally deter purely speculative applications, drawing parallels to mature markets like India.

Likewise, market observers warn that recent pressure to revoke the 10-unit policy stems largely from institutional and high-net-worth investors aiming to consolidate primary allotment shares. Retracting the policy risks converting Nepal's capital market back into an exclusive domain for the wealthy elite.

Experts suggest that SEBON and the Ministry of Finance focus on fundamental structural reforms rather than dismantling retail access:

• Mandate Higher Public Float: Require companies to issue at least 25% to 30% of total equity to the general public.

• Promote Premium & Book Building Issues: Ensure only financially sound companies enter the market at fair valuations.

• Introduce Modern Trading Tools: Implement intraday trading and short-selling to enhance liquidity.

• Expand Investor Education: Inform small investors on the long-term value of equity holding.