In a recent press release, SEBON made public a comprehensive Consultation Paper covering three major market instruments including margin lending, securities kending and borrowing (SLB) and covered short selling
This marks the first time SEBON has released a consultation paper of this nature to assess market readiness and gather feedback from key stakeholders. The initiative aligns with the Nepal Government’s budget announcement for FY 2083/84 to phase in intraday trading, short selling, and derivatives.
SEBON highlights that aligning with global capital market practices through margin trading, securities lending, and covered short selling will deepen the market, boost liquidity, and enhance efficiency. "These instruments will prove to be a milestone in making Nepal's capital market of international standard and expanding investors' participation," says SEBON.
The consultation paper is divided into four main sections:
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Current Market Analysis: Overview of Nepal's capital market and necessary structural reforms.
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Global Benchmarks: International practices, key learnings, and their application to Nepal.
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Regulatory Impact Analysis (RIA): Assessment of potential regulatory shifts and risk management.
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Policy Recommendations: Proposed models for margin lending, SLB, and covered short selling tailored for Nepal.
It also outlines distinct roles for SEBON, NEPSE, CDS & Clearing (CDSC), stockbrokers, banks/financial institutions, and institutional investors, alongside required IT modernizations and legal updates.
