SEBON moves on NEPSE's overhaul, but sets no date for changes

The Securities Board of Nepal (SEBON) has started work on restructuring the Nepal Stock Exchange (NEPSE). On Thursday it held its first formal talks with the exchange's board on how to carry out a government committee's reform report. The meeting set a direction but no timetable, so for now the overhaul is a policy agenda rather than a market event.

Why it matters: the reforms cover NEPSE's capital, ownership, technology and the instruments it lists. Each of these would eventually change how orders are matched, what can be traded and who controls the only stock exchange.

What the regulator plans

SEBON chairman Dr Gopal Prasad Bhatta said the regulator will use its own powers to push through more than 30 reform items. These range from restructuring NEPSE's capital and ownership to how the secondary market is run and supervised, and to new instruments and services. He described capital, staff and information technology as essentials for a modern exchange, and called the meeting the opening step of the reform process.

That is the key mechanism. Many of the changes will not need new legislation. The regulator can impose them on the exchange by directive, which makes them faster to deliver than the report alone would suggest.

NEPSE's board chairman, Narayan Prasad Risal, a joint secretary at the Ministry of Finance, said the exchange is concentrating first on the recommendations it can put in place straight away. He committed NEPSE to improving its technology and systems, its corporate governance, and the instruments and services it offers. SEBON deputy executive director Ambika Ojha Gupta presented the regulatory proposals the board has drafted.

Neither side published a list of the items or a sequence for them. Neither said which changes would reach trading first.

The market's reading

The news arrived on a quiet day for prices. The NEPSE index rose 0.31% on Friday to 2,634.17, which leaves it below its 52-week high of 2,969.50. Nothing in the session suggested the market was trading the reform talks. Without dates, the restructuring has nothing for prices to anchor to.

The picture would change once SEBON issues its first directive under the plan, or once NEPSE names the items it has chosen for immediate implementation. Changes to the trading system or to the exchange's ownership would matter most to anyone trading the market.